building winning brands - colgate...

Annual Report 2016

BUILDINGWINNING

BRANDS

1

Contents

Company Information 2

Core Values 3

Our Equities and Initiatives 4

Notice of Annual General Meeting 10

Financial Summary 15

Directors’ Report 16

Directors’ Report - In Urdu 21

Statement of Value Added 28

Statement of Compliance with the Code of Corporate Governance 29

Review Report to the Members on Statement of Compliance with best Practices of Code of Corporate Governance 31

Auditors’ Report to the Members 32

Balance Sheet 33

Profit and Loss Account 34

Statement of Changes in Equity 35

Cash Flow Statement 36

Notes to and Forming Part of the Financial Statements 37

Pattern of Shareholding 77

Operating and Financial Highlights 79

Form of Proxy

Form of Proxy - In Urdu

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Board of DirectorChairman

Chief Chairman

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AdvisorChairmanXXXXXXXXXXXX XXXXXX

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Company Information

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CaringThe Company cares about people: Colgate people, customers, shareholders and business partners. Colgate is committed to act with compassion, integrity, honesty and high ethics in all situations, to listen with respect to others and to value differences. The Company is also committed to protect the global environment, to enhance the communities where Colgate people live and work, and to be compliant with government laws and regulations.

All Colgate people are part of a team, committed to working together. Only by sharing ideas, technologies and talents can the Company achieve and sustain profitable growth.

Teamwork

Colgate is committed to getting better every day in all it does, as individuals and as teams. By better understanding consumers’ and customers’ expectations and continuously working to innovate and improve products, services and processes, Colgate will “become the best”.

Continuous Improvement

Core Values

Board of Directors Iqbal Ali Lakhani Chairman Amin Mohammed Lakhani Tasleemuddin Ahmed Batlay Aliya Saeeda Khan Lisa Mather Vinod Nambiar Zufiqar Ali Lakhani Chief Executive

Advisor Sultan Ali Lakhani

Audit Committee Aliya Saeeda Khan Chairperson Iqbal Ali Lakhani Amin Mohammed Lakhani Tasleemuddin Ahmed Batlay

Human Resource & Remuneration Committee Iqbal Ali Lakhani Chairman Zulfiqar Ali Lakhani Amin Mohammed Lakhani

Company Secretary Mansoor Ahmed

Auditors A. F. Ferguson & Co. Chartered Accountants

Internal Auditors BDO Ebrahim & Co. Chartered Accountants

Registered Office Lakson Square, Building No.2, Sarwar Shaheed Road,Karachi-74200. Pakistan

Shares Registrar FAMCO Associates (Private) Limited 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi

Factories G-6, S.I.T.E. Kotri District Jamshoro (Sindh)

217, Sundar Industrial Estate, Raiwind Road, Lahore

Website www.colgate.com.pk

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Board of DirectorChairman

Chief Chairman

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AdvisorChairmanXXXXXXXXXXXX XXXXXX

XXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXX XXXXXX

Company Information


CaringThe Company cares about people: Colgate people, customers, shareholders and business partners. Colgate is committed to act with compassion, integrity, honesty and high ethics in all situations, to listen with respect to others and to value differences. The Company is also committed to protect the global environment, to enhance the communities where Colgate people live and work, and to be compliant with government laws and regulations.

All Colgate people are part of a team, committed to working together. Only by sharing ideas, technologies and talents can the Company achieve and sustain profitable growth.

Teamwork

Colgate is committed to getting better every day in all it does, as individuals and as teams. By better understanding consumers’ and customers’ expectations and continuously working to innovate and improve products, services and processes, Colgate will “become the best”.

Continuous Improvement

Core Values


With a consistently growing market share, Colgate-Palmolive continued to lead the toothpaste market in Pakistan. This success was driven by a sharp focus on business strategies and increased marketing spends.

The flagship brand, Colgate Maximum Cavity Protection, rolled out a 360-degree communication platform ‘Na Cavities Ka Dar Na Pyar Main Jhijhak’ further assuring mothers who have always trusted Colgate for protecting their children from cavities. With consumer engagement as the essence, it was brought to life through multiple touch points ranging from media to activations.

In its 16th year of successfully providing children in Pakistan the opportunities to not only display their artistic talent but also become informed about good oral health, ‘My Bright Smile’ Global Art Contest received a record-breaking number of over 110,000 entries from more than 2219 schools from all over the country. One young Pakistani artist secured a position amongst the global top 12 winners. The winning artwork will be featured in the ‘Colgate My Bright Smile Calendar 2017’.

Oral Care

Global Art Contest (GAC)

Bright Smiles,Bright Futures (BSBF) ‘Bright Smiles, Bright Futures’ oral health education program has reached over 9 million children across Pakistan educating them about the importance of oral hygiene using various educative tools designed for classroom presentations and take-home material. From urban cities to rural areas, private schools to government schools, the program is conducted by well-trained Colgate trainers and educators.

Addressing one of the key reasons of sensitivity – enamel damage – a differentiated line extension of Colgate Sensitive Pro-Relief by the name of ‘Enamel Repair’ was launched. It protects teeth from acid erosion that causes enamel damage, occludes to repair and provides instant and long-lasting sensitivity relief.

Colgate Sensitive

Colgate SlimSoft Tri-Tip launched with the distinction of being the first toothbrush in Pakistan with 3 cleaning tips on each bristle. Its innovative design and super soft bristles reach between teeth and provide consumers with gentle, deeper clean. Its unique bristles with 3 cleaning tips enable better plaque removal from the gum line and interdental areas, with less pressure.

The result of Colgate’s outstanding and continued innovation in oral care products, Colgate SlimSoft Tri-Tip is an ideal brush for everyday use.

Colgate SlimSoft Tri-Tip


It has been an exciting year for the Personal Care category in terms of growth and new initiatives. To revitalize the Palmolive Naturals portfolio, the entire bar soap range was re-launched with fresh packaging graphics, aligning it with the new Palmolive global packaging design.

A new and innovative variant, ‘Flawless Clean’, was launched in the bar soap portfolio. Infused with 100% natural charcoal powder, the product helps cleanse the skin and eliminate dirt. Its long-lasting pleasant scent was also well received by our consumers. The launch was supported by integrated marketing communication, utilizing relevant touch points to engage consumers. In-store presence was strengthened through fortifying shelf space and improved visibility.

Personal Care

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Max Liquid improved its market share in the dishwash liquid segment through its new communication highlighting product superiority, i.e. 3 times more dishes washed with Max liquid versus regular dishwash liquids. A strong consumer engagement program escalated the communication across all relevant touch points.

Lemon Max Bar strengthened its leadership position in the dishwashing category through a strong 360-degree communication that yielded good results and gain in market share.

Surface Care

As the principal sponsor, Palmolive continued to support Karachi Women's Swimming Association in successfully organizing its 23rd Annual Swim Meet. Palmolive aspires to develop swimming as a leading sport in Pakistan as well as taking it to a level of international excellence. Our goal is to create a platform where local female swimmers can hone their talent and become icons of inspiration for other ambitious female swimmers, both at home and abroad.


It has been an exciting year for the Personal Care category in terms of growth and new initiatives. To revitalize the Palmolive Naturals portfolio, the entire bar soap range was re-launched with fresh packaging graphics, aligning it with the new Palmolive global packaging design.

A new and innovative variant, ‘Flawless Clean’, was launched in the bar soap portfolio. Infused with 100% natural charcoal powder, the product helps cleanse the skin and eliminate dirt. Its long-lasting pleasant scent was also well received by our consumers. The launch was supported by integrated marketing communication, utilizing relevant touch points to engage consumers. In-store presence was strengthened through fortifying shelf space and improved visibility.

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Max Liquid improved its market share in the dishwash liquid segment through its new communication highlighting product superiority, i.e. 3 times more dishes washed with Max liquid versus regular dishwash liquids. A strong consumer engagement program escalated the communication across all relevant touch points.

Lemon Max Bar strengthened its leadership position in the dishwashing category through a strong 360-degree communication that yielded good results and gain in market share.

Surface Care

As the principal sponsor, Palmolive continued to support Karachi Women's Swimming Association in successfully organizing its 23rd Annual Swim Meet. Palmolive aspires to develop swimming as a leading sport in Pakistan as well as taking it to a level of international excellence. Our goal is to create a platform where local female swimmers can hone their talent and become icons of inspiration for other ambitious female swimmers, both at home and abroad.

8 09Annual Report 201608 Annual Report 2016

Bonus Tristar improved its value to consumers by revitalizing the product bundle. This included a packaging change and product upgrade. With focus on recruiting new users and increasing conversion from laundry bar users, Bonus Tristar was re-launched with new integrated marketing communication.

Fabric CareBrite Equity re-launch was one of the key initiatives of the year. Brite successfully reached targeted consumers with its contemporary new packaging design and improved product. The re-launch was supported by substantial investment in advertising and promotion. In unison, various activities were carried out to increase trade interest in the product and engage shoppers at the store level.

AwardsTop 25 Companies’ Award

The Pakistan Stock Exchange Limited (PSX), formerly known as Karachi Stock Exchange Limited, ranked the Company amongst the top 25 listed companies in Pakistan for the years 2014 and 2015. This makes it the 12th consecutive year for the Company to receive this prestigious award.

PSX judges the companies based on a criteria focusing on service to the shareholders in compliance with listing regulations and good corporate governance.

MAP’S Corporate Excellence Awards

The Company was presented its 5th consecutive ‘Corporate Excellence Award’ at the 31st Corporate Excellence Awards Ceremony organized by the Management Association of Pakistan. The Company was also awarded Corporate Excellence Certificates on five earlier occasions in recognition of its achievements and overall performance.

909Annual Report 201608 Annual Report 2016

Bonus Tristar improved its value to consumers by revitalizing the product bundle. This included a packaging change and product upgrade. With focus on recruiting new users and increasing conversion from laundry bar users, Bonus Tristar was re-launched with new integrated marketing communication.

Fabric CareBrite Equity re-launch was one of the key initiatives of the year. Brite successfully reached targeted consumers with its contemporary new packaging design and improved product. The re-launch was supported by substantial investment in advertising and promotion. In unison, various activities were carried out to increase trade interest in the product and engage shoppers at the store level.

AwardsTop 25 Companies’ Award

The Pakistan Stock Exchange Limited (PSX), formerly known as Karachi Stock Exchange Limited, ranked the Company amongst the top 25 listed companies in Pakistan for the years 2014 and 2015. This makes it the 12th consecutive year for the Company to receive this prestigious award.

PSX judges the companies based on a criteria focusing on service to the shareholders in compliance with listing regulations and good corporate governance.

MAP’S Corporate Excellence Awards

The Company was presented its 5th consecutive ‘Corporate Excellence Award’ at the 31st Corporate Excellence Awards Ceremony organized by the Management Association of Pakistan. The Company was also awarded Corporate Excellence Certificates on five earlier occasions in recognition of its achievements and overall performance.

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NOTICE IS HEREBY GIVEN that the 38th Annual General Meeting of COLGATE-PALMOLIVE (PAKISTAN) LIMITED will be held on Thursday, September 22, 2016 at 10:00 a.m. at Avari Towers Hotel, Fatima Jinnah Road, Karachi to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the audited financial statements of the Company for the year ended June 30, 2016 together with the Directors’ and Auditors’ reports thereon.

2. To declare final dividend in cash @ 300% i.e. Rs.30 per share of Rs.10 each held by the members as recommended by the Board of Directors.

3. To appoint Auditors and fix their remuneration.

SPECIAL BUSINESS

Special Resolution

4. To consider, and if thought fit, to pass the following resolution as special resolution:

“RESOLVED that the Articles of Association of the Company be amended by adding a new sub-Clause 44(a) after the Clause 44 of the Articles of Association of the Company as under:

The provisions and requirements for e-voting as prescribed by the Securities & Exchange Commission of Pakistan for the time being and from time to time shall be deemed to be incorporated in these Articles, irrespective of the other provisions of these Articles of Association and notwithstanding anything contradictory therein.”

Ordinary Resolutions

5. To consider to pass the following ordinary resolutions:

a) “RESOLVED that the transactions carried out in normal course of business with associated companies during the year ended June 30, 2016 be and are hereby ratified and approved.”

b) “RESOLVED that the Chief Executive of the Company be and is hereby authorized to approve all the transactions carried out and to be carried out in normal course of business with associated companies during the ensuing year ending June 30, 2017 and in this connection the Chief Executive be and is hereby also authorized to take any and all necessary actions and sign/execute any and all such documents/indentures as may be required in this regard on behalf of the Company.”

Statement under section 160 of the Companies Ordinance, 1984 in the above matters mentioned in item Nos.4 & 5 is annexed.

By Order of the Board

(MANSOOR AHMED)Karachi: August 22, 2016 Company Secretary

Notice of Annual General Meeting

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NOTES:

1. The share transfer books of the Company will remain closed from September 16, 2016 to September 22, 2016 (both days inclusive). Transfers received in order by the Shares Registrar of the Company, M/s. FAMCO Associates (Private) Limited,8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi upto the close of business on September 15, 2016 will be treated in time for entitlement of the dividend.

2. A member, who has deposited his/her shares into Central Depository Company of Pakistan Limited, must bring his/her participant’s ID number and CDC account/sub-account number along with original Computerized National Identity Card (CNIC) or original Passport at the time of attending the meeting.

3. A member entitled to attend and vote at the Annual General Meeting may appoint another member as his/her proxy to attend, speak and vote instead of him/her.

4. Forms of proxy, in order to be valid must be properly filled-in/executed and received at the registered office of the Company situated at Lakson Square, Building No.2, Sarwar Shaheed Road, Karachi not later than 48 hours before the time of the meeting.

5. Members are requested to promptly notify Share Registrar of the Company of any change in their addresses.

6. Pursuant to the directive of the Securities & Exchange Commission of Pakistan (SECP), CNIC numbers of shareholders are mandatorily required to be mentioned on dividend warrants. Shareholders are therefore requested to submit a copy of their CNIC (if not already provided) to the Share Registrar. Henceforth, issuance of dividend warrant(s) will be subject to submission of copy of CNIC by individual shareholders.

7. In compliance with the SECP’s Circular No.8(4)SM/CDC 2008 dated April 05, 2013, the Company wishes to inform its shareholders that under the law they are also entitled to receive their cash dividend directly in their bank accounts instead of receiving it through dividend warrants. Shareholders, wishing to exercise this option, may submit their application to the Company’s Share Registrar, giving particulars relating to their name, folio number, bank account number, title of account and complete mailing address of the bank. CDC account holders should submit their request directly to their broker (participant)/CDC.

8. Pursuant to Notification vide SRO.787(1)/2014 of September 08, 2014, SECP has directed to facilitate the members of the company receiving Annual Financial Statements and Notices through electronic mail system (e-mail). We are pleased to offer this facility to our members who desire to receive Annual Financial Statements and Notices of the Company through e-mail in future. In this respect members are hereby requested to convey their consent via e-mail on a standard request form which is available at the Company website i.e. www.colgate.com.pk. Please ensure that your e-mail has sufficient rights and space available to receive such e-mail which may be larger than 1 MB file in size. Further, it is the responsibility of the member to timely update the Share Registrar of any change in the registered e-mail address.

9. (i) Pursuant to the provisions of the Finance Act 2016 effective July 1, 2016, the rates of deduction of income tax from dividend payments under the Income Tax Ordinance, 2001 have been revised as follows:

1. For filer of income tax return 12.5% 2. For non-filers of income tax return 20%

To enable the Company to make tax deduction on the amount of cash dividend @ 12.5% instead of 20%, shareholders whose names are not entered into the Active Taxpayers List (ATL) provided on the website of FBR, despite the fact that they are filers, are advised to make sure that their names are entered in ATL before the first day of book closure, otherwise tax on their cash dividend will be deducted @ 20% instead of 12.5%.

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(ii) Withholding Tax exemption from the dividend income, shall only be allowed if copy of valid tax exemption certificate or stay order from a competent court of law is made available to FAMCO Associates (Private) Limited, by the first day of Book Closure.

(iii) Further, according to clarification received from Federal Board of Revenue (FBR), with-holding tax will be determined separately on ‘Filer/Non-Filer’ status of Principal shareholder as well as joint-holder(s) based on their shareholding proportions, in case of joint accounts.

In this regard all shareholders who hold shares jointly are requested to provide shareholding proportions of Principal shareholder and Joint-holder(s) in respect of shares held by them (only if not already provided) to our Share Registrar, in writing as follows:

CompanyName

Folio/CDSAccount #

Total Shares

Principal Shareholder Joint Shareholder

Name andCNIC #

ShareholdingProportion

(No. of Shares)

Name andCNIC #

ShareholdingProportion

(No. of Shares)

The required information must reach our Share Registrar within 10 days of this notice, otherwise it will be assumed that the shares are equally held by Principal shareholder and Joint Holder(s).

(iv) For any query/problem/information, the investors may contact the Company Secretary at phone: 35698082 and email address [email protected] and/or FAMCO Associates (Private) Limited at phone: 34380101-5 and email address: [email protected].

(v) Corporate shareholders having CDC accounts are required to have their National Tax Number (NTN) updated with their respective participants, whereas corporate physical shareholders should send a copy of their NTN certificate to the company or FAMCO Associates (Private) Limited. Shareholders while sending NTN or NTN certificates, as the case may be, must quote company name and their respective folio numbers. Without the NTN company would not be in a position to check filer status on the ATL and hence higher tax of 20% may be applied in such cases.

10. Members can also avail video conference facility, in this regard, please fill the following and submit to registered address of the Company 10 days before holding of the Annual General Meeting. If the Company receives consent from members holding in aggregate 10% or more shareholding residing at a geographical location, to participate in the meeting through video conference at least 10 days prior to date of the meeting, the Company will arrange video conference facility in the city subject to availability of such facility in that city.

“I/We, ____________________ of _____________, being a member of Colgate-Palmolive (Pakistan)

Limited, holder of __________ ordinary share(s) as per Registered Folio No. ______ hereby opt for video

conference facility at _____________.”

11. Form of Proxy is enclosed.

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STATEMENT OF MATERIAL FACTS CONCERNING SPECIAL BUSINESS PURSUANT TO SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984

This statement sets out the material facts concerning the Special Business, given in agenda item Nos.4 & 5 of the Notice will be considered to be passed by the members. The purpose of the Statement is to set forth the material facts concerning such Special Business.

1. Agenda item No.4 of the Notice – Amendment/change in Articles of Association of the Company

To give effect to the Companies (E-Voting) Regulation 2016, shareholders’ approval is being sought to amend the Articles of Association of the Company to enable e-voting. The Board of Directors have recommended to the members to approve and adopt amendment/change in Articles of Association of the Company by inserting a new sub-Clause 44 (a) after the Clause 44 of the Articles of Association of the Company.

Subject to approval of the members the proposed resolution will be considered to be passed by the members as a special resolution.

2. Agenda Item No. 5(a) of the Notice – Transactions carried out with associated companies during the year ended June 30, 2016 to be passed as an Ordinary Resolution

The transactions carried out in normal course of business with associated companies (Related parties) were being approved by the Board as recommended by the Audit Committee on quarterly basis pursuant to clause 5.19.6 (b) of the Code of Corporate Governance, 2012.

During the Board meeting it was pointed out by the Directors that as the majority of Company Directors were interested in these transactions due to their common directorship and holding of shares in the associated companies, the quorum of directors could not be formed for approval of these transactions which have to be approved by the shareholders in the General Meeting.

In view of the above, the normal business transactions conducted during the financial year ended June 30, 2016 with associated companies as under are being placed before the shareholders for their consideration and approval/ratification.

N A M E DESCRIPTION OFTRANSACTION

AMOUNT IN RS ‘ 000

PURCHASE SALE OTHERS

Accuray Surgicals Ltd. Purchase of Dental Instruments For Dental Conference

245

Century Insurance Co. Ltd. Insurance Services Received 222,685

Insurance Claims Received 7,396

Insurance Commission Received 17,631

Dividend Paid 441

Century Paper & Board Mills Ltd. Purchase of Goods - Packing Material 478,813

Sale of Finished Goods 47

Clover Pakistan Ltd. Services Provided / Reimbursement of Expenses 488

Purchase of Watches 41

Purchase of Computers and Laptops 45

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N A M E DESCRIPTION OFTRANSACTION

AMOUNT IN RS ‘ 000

PURCHASE SALE OTHERS

Hasanali and Gulbanoo Rent & Allied Services 29,361

Lakhani Foundation Sale of Finished Goods 49

Donations Paid 18,000

Merit Packaging Ltd. Purchase of Packing Material 103,531


SIzA (Pvt) Ltd. Guest House Services Received 517


Dividend Paid 208,365

SIzA Foods (Pvt) Ltd. Sale of Finished Goods 68

Purchase of Finished Goods 152

Tetley Clover (Pvt) Ltd Purchase of Finished Goods 78

Services Received / Reimbursement of Expenses 8,854


Services Provided / Reimbursement of Expenses 4,725

Purchase of Laptops, Computers & Printers 1,348

Purchase of Vehicles 4,438

Purchase of Tools 420

Ice Animations (Pvt) Ltd. Graphic Animation 1,089

The Directors are interested in the resolution to the extent of their common directorships and their shareholding in the associated companies.

3. Agenda Item No. 5(b) of the Notice – Authorization to the Chief Executive for the transactions carried out and to be carried out with associated companies during the ensuing year ending June 30, 2017 to be passed as an Ordinary Resolution

The Company would be conducting transactions with associated companies in the normal course of business. The majority of Directors are interested in these transactions due to their common directorship and shareholding in the associated companies. Therefore, such transactions with associated companies have to be approved by the shareholders.

In order to comply with the provisions of clause 5.19.6 (b) of the Code of Corporate Governance, 2012, the shareholders may authorize the Chief Executive to approve transactions carried out and to be carried out in normal course of business with associated companies during the ensuing year ending June 30, 2017.

The Directors are interested in the resolution to the extent of their common directorships and their shareholding in the associated companies.

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Financial SummaryYear Ended June 30, 2016

Year ended June 30

Rupees in million except EPS 2014 2015 % Change 2016 % Change

Gross Sales 29,367 31,175 6.2% 33,135 6.3%

Operating Income 2,477 3,295 33.0% 4,199 27.4%

Net Profit After Tax 1,693 2,222 31.2% 2,819 26.8%

Earnings per share (Rs.) 35.31 46.34 31.2% 58.78 26.8%

Shareholders’ Equity 7,745 9,054 16.9% 10,677 17.9%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2014 2015 2016

29,367

31,175

33,135

Gross sales Rs in million

-

2,000

4,000

6,000

8,000

12,000

10,000

2014 2015 2016

7,745

9,054

10,677

Shareholders' equity Rs in million

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

55.00

60.00

2014 2015 2016

35.31

46.34

58.78Earnings Per Share

Rupees

28

Year ended June 30 2016 2015

(Rs in million)Wealth Generated

Total revenue net of discount and allowances 31,514 29,635

Bought-in-material and services 20,045 19,620 11,469 10,015

Wealth Distributed

To EmployeesSalaries, benefits and other costs 1,448 1,242

To GovernmentIncome tax, sales tax 6,636 6,016

To Providers of CapitalDividend to shareholders 1,439 1,199 Mark up/interest expenses on borrowed funds 23 20

Retained for Reinvestment and GrowthDepreciation and retained profits 1,923 1,538

11,469 10,015

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

To Government Depreciation & Retained Profit

To Employees To Shareholders

To Lenders

57.9%

16.8%

12.6% 12.5%

0.2%

Statement of Value Added

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Statement of Compliance with the Code of Corporate Governance

For the year ended June 30, 2016

This statement is being presented to comply with the requirements of Rule Book of Pakistan Stock Exchange Limited, Chapter 5.19.23(b) of the Code of Corporate Governance where the Company is listed for the purpose of establishing a framework of good governance, whereby a listed Company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive Directors and Directors representing minority interests on its Board of Directors. At present the Board includes:

Category Name

Independent Director Ms. Aliya Saeeda Khan

Executive Directors M/s. Zulfiqar Ali Lakhani and Tasleemuddin A. Batlay

Non-Executive Directors M/s. Iqbal Ali Lakhani, Amin Mohammed Lakhani, Lisa Mather and Vinod Nambiar

The independent director meets the criteria of independence under clause 5.19.1(b) of the CCG.

2. The Directors have confirmed that none of them is serving as a Director in more than seven listed companies, including this Company.

3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a Banking company, a DFI or an NBFI or being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. A casual vacancy occurred on the Board on 27 July 2015 was filled up by the directors on the same day.

5. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies alongwith the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive Director have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a Director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, alongwith agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. In accordance with the criteria specified on clause 5.19.7 of PSX Rules, majority of Directors of the Company are exempted from the requirement of Directors’ training program.

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10. The Board has approved appointment of CFO including their remuneration and terms and conditions of employment. Mr. Mansoor Ahmed was assigned the responsibilities of Company Secretary of Colgate-Palmolive (Pakistan) Limited in addition to his responsibilities in other Group Companies. Internal Audit function of the Company was outsourced with the approval of the Board. The Board has approved appointment of Head of Internal Audit and terms and conditions of his appointment.

11. The Directors’ report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the CCG.

15. The Board has formed an Audit Committee. It comprises four members of whom three are non-executive Directors and the Chairperson of the Committee is an independent Director.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Company. The Terms of Reference of the Committee have been formed and advised to the Committee for compliance.

17. The Board has formed an HR and Remuneration Committee. It comprises of three members, of whom two are non-executive Directors and the Chairman of the Committee is a non-executive Director.

18. The Board has outsourced internal audit function of the Company to a firm of Chartered Accountants, who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Company.

19. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the Institute of Chartered Accountants of Pakistan.

20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

21. The ‘closed period’ prior of the announcement of interim/final results, and business decisions, which may materially affect the market price of Company’s securities, was determined and intimated to directors, employees and stock exchange.

22. Material/price sensitive information has been disseminated among all market participants at once through stock exchange.

23. We confirm that all other material principles enshrined in the CCG have been complied with.

Karachi: July 28, 2016

Zulfiqar Ali LakhaniChief Executive

Tasleemuddin Ahmed BatlayDirector

31

Review Report to the Members on Statement of Compliance With Best Practices of Code of Corporate Governance

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors (the Board) of Colgate Palmolive (Pakistan) Limited (the Company) for the year ended June 30, 2016 to comply with the requirements of Rule 5.19 of the Rule Book of the Pakistan Stock Exchange where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company’s compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Company’s personnel and review of various documents prepared by the Company to comply with the Code.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board’s statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board for their review and approval, its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are not executed at arm’s length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company’s compliance, in all material respects, with the best practices contained in the Code as applicable to the Company for the year ended June 30, 2016.

Further, we highlight that the Code requires non-executive directors as members of Audit Committee, however, the Audit Committee of the Company comprises of four members, three of them are non-executive directors as reflected in paragraph 15 of the Statement of Compliance.

Karachi: July 28, 2016A.F. FERGUSON & CO.Chartered Accountants

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Auditors’ Report to the Members

We have audited the annexed balance sheet of Colgate-Palmolive (Pakistan) Limited as at June 30, 2016 and the related profit and loss account, statement of changes in equity and cash flow statement together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the company’s management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that-

(a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984;

(b) in our opinion-

(i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied;

(ii) the expenditure incurred during the year was for the purpose of the company’s business; and

(iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

(c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of changes in equity and cash flow statement together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the company’s affairs as at June 30, 2016 and of the profit, its changes in equity and cash flows for the year then ended; and

(d) in our opinion, zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was deducted by the company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

Chartered AccountantsKarachi, July 28, 2016

Audit Engagement Partner: Khurshid Hasan

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Balance SheetAs at June 30, 2016



Note 2016 2015(Rupees in ‘000)

ASSETS

NON-CURRENT ASSETSProperty, plant and equipment 4 2,769,966 2,935,589 Intangible assets 5 6,091 7,552 Long term loans 6 30,675 19,585 Long term security deposits 7 17,887 14,267

2,824,619 2,976,993 CURRENT ASSETSStores and spares 8 158,257 152,238 Stock in trade 9 2,827,048 2,607,106 Trade debts 10 537,994 666,378 Loans and advances 11 208,587 164,821 Trade deposits and short term prepayments 12 110,647 32,960 Other receivables 13 15,986 18,101 Accrued profit 4,425 1,482 Taxation 461,116 886,001 Short term investments 14 5,436,147 3,101,198 Cash and bank balances 15 1,122,602 936,419

10,882,809 8,566,704 TOTAL ASSETS 13,707,428 11,543,697

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised share capital 16 750,000 750,000 Issued, subscribed and paid-up share capital 16 479,549 479,549 Reserves 17 10,260,504 8,640,488 Remeasurement of post retirement

benefits obligation (69,982) (67,469)Surplus on revaluation of investments 7,296 1,048

10,677,367 9,053,616 LIABILITIES

NON-CURRENT LIABILITIES

Deferred taxation 18 265,940 348,076 Long term deposits 19 48,644 25,493 Deferred liability 20 2,683 37,088

317,267 410,657 CURRENT LIABILITIESTrade and other payables 21 2,712,794 2,079,424 TOTAL LIABILITIES 3,030,061 2,490,081

TOTAL EQUITY AND LIABILITIES 13,707,428 11,543,697

CONTINGENCIES AND COMMITMENTS 23

The annexed notes 1 to 44 form an integral part of these financial statements.

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Profit and Loss AccountFor the year ended June 30, 2016




Turnover 33,135,291 31,174,591 Sales tax (5,278,903) (4,962,757)Trade and other discounts (2,038,419) (1,901,672)Net turnover 25,817,969 24,310,162

Cost of sales 24 (16,502,405) (16,631,197)Gross profit 9,315,564 7,678,965

Selling and distribution cost 25 (4,870,647) (4,214,248)Administrative expenses 26 (325,531) (268,311)Other expenses 27 (336,846) (262,926)Other income 28 416,927 361,719 Profit from operations 4,199,467 3,295,199

Finance cost and bank charges 29 (23,476) (20,410)Profit before taxation 4,175,991 3,274,789

Taxation 30 (1,357,102) (1,052,621)Profit after taxation 2,818,889 2,222,168

Other comprehensive income / (loss) for the year - net of tax

Items that may be reclassified subsequently to profit and lossSurplus on investments categorised as ‘available for sale’ 240,573 168,929 Gain realised on disposal of short term investments (233,187) (254,307)Impact of tax (1,138) 10,672

Total items that may be reclassified subsequently to profit and loss 6,248 (74,706)

Item that will not be reclassified to profit and lossRemeasurement of post retirement benefits obligation (3,696) (35,591)Impact of tax 1,183 11,745

Total items that will not be reclassified to profit and loss (2,513) (23,846)

3,735 (98,552)

Total comprehensive income for the year 2,822,624 2,123,616

-------------------Rupees-------------------

Earnings per share - basic and dilutive 31 58.78 46.34


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Statement of Changes in EquityFor the year ended June 30, 2016

Issued, subscribed and paid-up share capital

Reserves Remeasurem-ent on post retirement benefits

obligation - net of tax

Surplus on revaluation of investments-

net of tax

Total Equity

Capital reserve -

share premium

Revenue reserves

Sub total - reservesGeneral

reserve

Unappro-priated profit

------------------------------------------------------------------------(Rupees in ‘000)-------------------------------------------------------------------



Balance as at July 1, 2014 479,549 13,456 5,525,000 1,695,098 7,233,554 (43,623) 75,754 7,745,234

Transactions with owners

Final dividend for the year ended June 30, 2014 at the rate of Rs 17 per share - - - (815,234) (815,234) - - (815,234)

Total transactions with owners - - - (815,234) (815,234) - - (815,234)

Comprehensive income for the year Profit after taxation for the year ended June 30, 2015 - - - 2,222,168 2,222,168 - - 2,222,168

Other comprehensive loss - - - - - (23,846) (74,706) (98,552)

Total comprehensive income for the year ended June 30, 2015 - - - 2,222,168 2,222,168 (23,846) (74,706) 2,123,616

Transfer to general reserve - - 878,000 (878,000) - - - -

Balance as at June 30, 2015 479,549 13,456 6,403,000 2,224,032 8,640,488 (67,469) 1,048 9,053,616

Transactions with owners

Final dividend for the year ended June 30, 2015 at the rate of Rs 25 per share - - - (1,198,873) (1,198,873) - - (1,198,873)

Total transactions with owners - - - (1,198,873) (1,198,873) - - (1,198,873)

Comprehensive income for the year Profit after taxation for the year ended June 30, 2016 - - - 2,818,889 2,818,889 - - 2,818,889

Other comprehensive (loss) / income - - - - - (2,513) 6,248 3,735

Total comprehensive income for the year ended June 30, 2016 - - - 2,818,889 2,818,889 (2,513) 6,248 2,822,624

Transfer to general reserve - - 1,025,000 (1,025,000) - - - -

Balance as at June 30, 2016 479,549 13,456 7,428,000 2,819,048 10,260,504 (69,982) 7,296 10,677,367


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Cash Flow StatementFor the year ended June 30, 2016




CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 32 4,784,996 3,388,708 Finance cost paid - (3)Taxes paid (1,014,308) (1,419,704)Long term loans (11,090) (5,279)Long term security deposits (assets) (3,620) 320 Staff retirement gratuity paid (59,956) (39,129)Long term deposits 23,151 4,261 Net cash generated from operating activities 3,719,173 1,929,174

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment (399,972) (318,149)Purchase of intangible assets (6,955) (6,247)Short term investments made during the year (14,144,000) (7,000,000)Proceeds from sale of property, plant and equipment 63,001 24,501 Profit received on saving accounts 49,848 53,205 Profit received on Pakistan Investment Bonds 1,072 - Profit received on term deposit receipt 9,955 1,401 Sale proceeds on disposal of short term investments 11,967,125 7,013,126 Net cash used in investing activities (2,459,926) (232,163)

CASH USED IN FINANCING ACTIVITIES

Dividend paid (1,197,439) (814,548)

Net increase in cash and cash equivalents 61,808 882,463

Cash and cash equivalents at the beginning of the year 1,736,419 853,956 Cash and cash equivalents at the end of the year 33 1,798,227 1,736,419


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For the year ended June 30, 2016Notes to and Forming Part of the Financial Statements

1. THE COMPANY AND ITS OPERATIONS Colgate-Palmolive (Pakistan) Limited (the Company) was initially incorporated in Pakistan on December 5, 1977 as a public limited company with the name of National Detergents Limited. The name of the Company was changed to Colgate-Palmolive (Pakistan) Limited on March 28, 1990 when the Company entered into a Participation Agreement with Colgate-Palmolive Company, USA. The Company is listed on the Karachi and Lahore Stock Exchanges, with effect from January 11, 2016 both stock exchanges merged into Pakistan Stock Exchange. The registered office of the Company is situated at Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi, Pakistan.

The Company is mainly engaged in the manufacture and sale of detergents, personal care and other related products.

2. SIGNIFICANT ACCOUNTING INFORMATION AND POLICIES

2.1 Basis of preparation

2.1.1 Basis of measurement

These financial statements have been prepared under the historical cost convention unless otherwise specifically stated.

2.1.2 Statement of compliance

These financial statements have been prepared in accordance with the requirements of the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984 (the Ordinance), provision of and directive issued under the Ordinance. In case requirements differ, the provisions or directives of the Ordinance shall prevail.

2.1.3 New standards, amendments to approved accounting standards and new interpretations

2.1.3.1 Standards and amendments to approved accounting standards which became effective during the year ended June 30, 2016

2.1.3.2 There were certain new standards and amendments to the approved accounting standards which became effective during the year ended June 30, 2016 but are considered not to be relevant or have any significant effect on the Company’s operations and are, therefore, not disclosed in these financial statements except for IFRS 13 ‘Fair Value Measurement’. IFRS 13 consolidates the guidance on how to measure fair value, which was spread across various IFRSs, into one comprehensive standard. It introduces the use of an exit price, as well as extensive disclosure requirements, particularly the inclusion of non-financial instruments into the fair value hierarchy. The application of IFRS 13 does not have an impact on fair values except for disclosures which are included in note 38.1.4 to these financial statements.

2.1.4 Amendments to approved accounting standards that are effective for the Company’s accounting periods beginning after July 1, 2016:

2.1.4.1 There are certain new amendments to the approved accounting standards that are mandatory for the Company’s accounting periods beginning after July 1, 2016 but are considered not to be relevant or are not expected to have any significant effect on the Company’s operations and are, therefore, not disclosed in these financial statements.

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2.2 Property, plant and equipment

2.2.1 These assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any, and capital work in progress which are stated at cost.

Assets having cost exceeding the minimum threshold as determined by the management are capitalised. All other assets are charged to income in the year when acquired.

Depreciation is charged to income applying the straight line method by applying rates (as stated in note 4.1.1). Depreciation on additions is charged from the month in which the asset is put to use and on disposal upto the month of disposal.

No depreciation is charged if the asset’s residual value exceeds its carrying amount.

Residual values and the useful lives are reviewed at each balance sheet date and adjusted if expectations differ significantly from previous estimates.

Residual values are determined by the management as the amount it expects it would receive currently for an item of property, plant and equipment if it was already of the age and in the condition expected at the end of its useful life based on the prevailing market prices of similar assets already at the end of their useful lives.

Useful lives are determined by the management based on the expected usage of assets, physical wear and tear, technical and commercial obsolescence, legal and similar limits on the use of the assets and other similar factors.

The carrying values of property, plant and equipment are reviewed at each reporting date for indications that an asset may be impaired and carrying values may not be recovered. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the asset or cash generating unit is written down to its recoverable amount. The recoverable amount of property, plant and equipment is the greater of fair value less cost to sell and value in use.

Normal repairs and maintenance are charged to income as and when incurred. Major renewals and improvements, if any, are capitalised, when it is probable that future economic benefits will flow to the Company.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with carrying amount of the relevant assets. These are included in profit and loss account.

2.2.2 Capital work in progress

All expenditure connected with specific assets incurred during installation and construction period are carried under capital work in progress. These are transferred to specific assets as and when assets are available for use.

2.3 Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance.

Intangible assets are recognised when it is probable that the expected future economic benefits will flow to the entity and the cost of the asset can be measured reliably. Cost of the intangible asset (i.e. computer software) includes purchase cost and directly attributable expenses incidental to bring the asset for its intended use.

Costs associated with maintaining computer software are recognised as an expense as and when incurred.

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Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is charged over the estimated useful life of the asset on a systematic basis applying the straight line method at the rate of 33.33%.

Useful lives of intangible operating assets are reviewed, at each balance sheet date and adjusted if the impact of amortisation is significant.

The carrying amount of the intangible is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the profit and loss account for the amount by which the asset’s carrying amount exceeds its recoverable amount. Reversal of impairment losses are also recognised in the profit and loss account, however, it is restricted to the original cost of the asset.

2.4 Stores and spares

Stores and spares are valued at lower of cost using the moving average method and estimated net realisable value. Items in transit are valued at cost as accumulated upto the balance sheet date. Provision for obsolete items, if any, is based on their condition as at the balance sheet date depending upon the management’s judgement.

Loose tools are recognised as expense as and when purchased as their inventory is generally not significant.

Net realisable value specifies the estimated selling price in the ordinary course of business less the estimated cost of completion and cost necessarily to be incurred to make the sale.

2.5 Stock in trade

Stock in trade is valued at the lower of cost and estimated net realisable value. Cost is determined as follows:

Stages of stock in trade Basis of valuationRaw and packing material Moving average cost

Raw and packing material in bonded warehouse and in transit

Cost accumulated upto the balance sheet date

Work in process and finished goods Cost of direct materials and appropriate portion of production overheads

Trading goods Moving average cost

Net realisable value is determined on the basis of estimated selling price of the product in the ordinary course of business less estimated costs of completion and the estimated costs necessary to be incurred for its sale.

2.6 Trade debts and other receivables

Trade debts and other receivables are recognised and carried at original invoice amount less an estimated allowance made for doubtful receivables based on review of outstanding amounts at the year end. A provision for impairment of trade debts and other receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. Debts, considered irrecoverable, are written off, as and when identified.

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2.7 Taxation

Current

Provision for current taxation is the amount computed on taxable income at the current rates of taxation or alternative corporate tax computed on accounting income or minimum tax on turnover, whichever is higher, and taxes paid / payable on final tax basis, after taking into account tax credit available, if any. The charge for the current tax also includes adjustments where necessary, relating to prior years which arise from the assessments made / finalised during the year.

Deferred

Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amount of the assets and liabilities and their tax bases.

Deferred tax liabilities are recognised for all major taxable temporary differences.

Deferred tax assets are recognised for all major deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised.

The carrying amount of the deferred tax asset is reviewed at each balance sheet date and is recognised only to the extent that it is probable that future taxable profits will be available against which the assets may be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it becomes probable that future taxable profit will allow deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to the year when the asset is utilised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date.

2.8 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents consist of cash and bank balances, cheques in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, running finance under mark-up arrangements and short term loans which form an integral part of the Company’s cash management.

2.9 Borrowing costs

Borrowing costs relating to the acquisition, construction or production of a qualifying asset are recognised as part of the cost of that asset. All other borrowing costs are recognised as an expense in the period in which these are incurred.

2.10 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed periodically and adjusted to reflect the current best estimates.

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2.11 Staff retirement benefits

Defined benefit plan

The Company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent employees subject to attainment of retirement age and minimum service of prescribed period. Contributions are made to the fund on the basis of actuarial recommendations. Actuarial valuation is carried out using the projected unit credit method.

All actuarial gains and losses (i.e. remeasurements) are recognised in ‘other comprehensive income’ as they occur.

Defined contribution plan

The Company operates an approved funded provident fund scheme for all its permanent employees. Equal monthly contributions are made, both by the Company and its employees, to the fund at the rate of 9 percent of the basic salaries of employees.

Compensated absences

The liability in respect of compensated absences of employees is accounted for in the period in which the absences accrue. As the component of liability involved is not material, the Company does not carry out actuarial valuation for the said liability.

2.12 Revenue recognition

- Sales are recognised on dispatch of goods to the customers.

- Profit on bank balances are recognised on a time proportion basis on the principal amount outstanding and at the applicable rate.

- Insurance commission income is recognised as and when received.

- Gains / (losses) arising on disposal of investments are included in income currently and are recognised on the date when the transaction takes place.

- Unrealised gains / (losses) arising on revaluation of securities classified as ‘available for sale’ are included in other comprehensive income in the period in which they arise.

2.13 Foreign currency transactions

Transactions in foreign currencies are translated in Pakistan rupees (functional and presentation currency) at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pakistan rupees at the rates of exchange approximating those prevalent at the balance sheet date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.

2.14 Dividend and other appropriations

Dividend is recognised as a liability in the period in which it is declared. Appropriations of profit are reflected in the statement of changes in equity in the period in which such appropriations are approved.

2.15 Financial instruments

2.15.1 Financial assets

The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available for sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at the time of initial recognition.

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a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets.

b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

c) Held to maturity

Held to maturity are financial assets with fixed or determinable payments and fixed maturity that are quoted in an active market, where management has the intention and ability to hold till maturity are carried at amortised cost.

d) Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investments within twelve months from the balance sheet date. Available for sale financial assets in such case are classified as short term investments in the balance sheet.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised as “Other comprehensive income” are included in the profit and loss account as gains and losses on disposal of short term investments. Interest on available for sale securities calculated using effective interest method is recognised in the profit and loss account. Dividends on available for sale equity instruments are recognised in the profit and loss account when the Company’s right to receive payments is established.

All financial assets are recognised at the time when the Company becomes a party to the contractual provisions of the instrument. Regular purchases and sales of investments are recognised at trade date i.e. the date on which the Company commits to purchase or sell the asset.

Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the profit and loss account.

Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. ‘Loans and receivables’ and ‘held to maturity’ investments are carried at amortised cost using effective interest rate method.

Gains or losses arising, from changes in the fair value of the ‘financial assets at fair value through profit or loss’ are recognised in the profit and loss for the year. Changes in the fair value of instruments classified as ‘available for sale’ are recognised in ‘Other comprehensive income’ until derecognised or impaired, when the accumulated fair value adjustments recognised in unrealised surplus on revaluation of investments are included in the profit / loss for the year.

The fair values of quoted investments are based on current prices. If the market for a financial asset is not active (for unlisted securities), the Company measures the investments at cost less impairment in value, if any.

Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

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The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired.

2.15.2 Financial liabilities

All financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of the instrument.

Financial liabilities, other than those at fair value through profit or loss, are measured at amortised cost using the effective yield method.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange and modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in respective carrying amounts is recognised in the profit and loss account.

2.15.3 Off-setting of financial assets and financial liabilities

A financial asset and a financial liability is offset and the net amount is reported in the financial statements if the Company has a legally enforceable right to set-off the transaction and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

2.16 Contingent liabilities

Contingent liability is disclosed when:

- there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company; or

- there is present obligation that arises from past events but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

2.17 Contingent assets

Contingent assets are disclosed when there is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are not recognised until their realisation become virtually certain.

2.18 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Chief Executive Officer has been identified as the ‘chief operating decision-maker’, who is responsible for allocating resources and assessing performance of the operating segments.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. Estimates and judgements are continually evaluated and are based on historic experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. In the process of applying the Company’s accounting policies, the management has made the following estimates and judgements which are significant to the financial statements:

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a) assumptions and estimates used in determining the recoverable amount, residual values and useful lives of property, plant and equipment (note 4);

b) assumptions and estimates used in determining the useful lives and residual values of intangible assets (note 5);

c) assumptions and estimates used in determining the provision for slow moving stores and spares (note 8);

d) assumptions and estimates used in writing down items of stock in trade to their net realisable value (note 9);

e) assumptions and estimates used in calculating the provision for impairment for trade debts (note 10);

f) assumptions and estimates used in deriving fair value of short term investments (note 14);

g) deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets may be utilised (note 18);

h) assumptions and estimates used for valuation of present value of defined benefit obligation and fair value of plan assets (note 20);

i) assumptions and estimates used in disclosure and assessment of provision for contingencies (note 23); and

j) assumptions and estimates used in determining current income under relevant tax law and the decisions of appellate authorities on certain cases issued in the past (note 30).

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

4. PROPERTY, PLANT AND EQUIPMENT Note 2016 2015

(Rupees in ‘000)

Operating fixed assets 4.1 2,662,034 2,846,001 Capital work in progress 4.2 107,932 89,588

2,769,966 2,935,589

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4.1 Operating fixed assets

4.1.1 The following is a statement of operating fixed assets:

Leasehold land

Factory building on leasehold

land

Plant and machinery

Electric fittings and installation

Gas installation

Furniture and

fixtures

Tools and

equipmentVehicles

Computers and

accessories

Office equipment Total

---------------------------------------------------------------------------(Rupees in ‘000)-----------------------------------------------------------------------------------At July 1, 2014Cost 89,850 726,090 3,127,704 182,092 154 99,116 273,430 383,512 122,127 72,203 5,076,278 Accumulated depreciation - (295,596) (1,201,104) (62,766) (121) (37,989) (138,283) (170,405) (88,227) (34,242) (2,028,733)Net book value 89,850 430,494 1,926,600 119,326 33 61,127 135,147 213,107 33,900 37,961 3,047,545

Year ended June 30, 2015Additions - 3,208 72,573 8,661 - 1,856 13,648 83,866 26,820 13,173 223,805 Transfers from capital work in progress during the year (note 4.2.1) - 4,746 87,246 1,121 - 904 27 9,338 122 943 104,447

Disposals (note 4.1.4)Cost - - (7,167) - - - - (35,126) (3,133) (1,663) (47,089)Depreciation - - 5,746 - - - - 23,189 2,970 1,210 33,115 Net book value - - (1,421) - - - - (11,937) (163) (453) (13,974)

Write offs (note 4.1.3)Cost - - (325) - - (45) (494) - (2,206) (612) (3,682)Depreciation - - 245 - - 17 394 - 2,206 507 3,369 Net book value - - (80) - - (28) (100) - - (105) (313)

Depreciation charge for the year (note 4.1.5) - (67,875) (297,025) (19,454) (7) (14,123) (36,949) (44,750) (24,668) (10,658) (515,509)Net book value as at June 30, 2015 89,850 370,573 1,787,893 109,654 26 49,736 111,773 249,624 36,011 40,861 2,846,001

Year ended June 30, 2016

Additions - 2,939 61,718 2,116 - 1,601 14,916 55,343 25,396 14,724 178,753 Transfers from capital work in progress during the year (note 4.2.1) - 16,616 177,759 5,568 - 970 1,637 - - 325 202,875

Disposals (note 4.1.4)Cost - - - - - - (595) (62,995) (4,356) (921) (68,867)Depreciation - - - - - - 491 39,965 4,209 647 45,312 Net book value - - - - - - (104) (23,030) (147) (274) (23,555)

Write offs (note 4.1.3)Cost - - - - - (707) - - (9,429) (1,282) (11,418)Depreciation - - - - - 323 - - 9,263 1,104 10,690 Net book value - - - - - (384) - - (166) (178) (728)

Depreciation charge for the year (note 4.1.5) - (69,075) (309,797) (20,497) (7) (14,428) (40,446) (49,488) (24,228) (13,346) (541,312)Net book value as at June 30, 2016 89,850 321,053 1,717,573 96,841 19 37,495 87,776 232,449 36,866 42,112 2,662,034

At June 30, 2015Cost 89,850 734,044 3,280,031 191,874 154 101,831 286,611 441,590 143,730 84,044 5,353,759 Accumulated depreciation - (363,471) (1,492,138) (82,220) (128) (52,095) (174,838) (191,966) (107,719) (43,183) (2,507,758)Net book value 89,850 370,573 1,787,893 109,654 26 49,736 111,773 249,624 36,011 40,861 2,846,001

Annual rates of depreciation (%) 2015 - 10 10 10 10 15 15 20 33 15

At June 30, 2016Cost 89,850 753,599 3,519,508 199,558 154 103,695 302,569 433,938 155,341 96,890 5,655,102 Accumulated depreciation - (432,546) (1,801,935) (102,717) (135) (66,200) (214,793) (201,489) (118,475) (54,778) (2,993,068)Net book value 89,850 321,053 1,717,573 96,841 19 37,495 87,776 232,449 36,866 42,112 2,662,034

Annual rates of depreciation (%) 2016 - 10 10 10 10 15 15 20 33 15

46

4.1.2 Cost of operating fixed assets held by third parties, for manufacturing certain products of the Company, are as follows:

2016 2015(Rupees in ‘000)

Industrial Packages (Private) Limited 7,132 7,132 Rollins Industries (Private) Limited 18,609 18,609 Techno Plast 8,503 9,388 Naveed Company 113 113 Afeef Packages (Private) Limited 1,348 1,348 Transpak Corporation Limited 1,675 1,675

37,380 38,265

These assets are free of lien and the Company has full right of repossession of these assets.

4.1.3 During the year, the Company has identified certain items of operating fixed assets from which further economic benefits are no longer being derived. Therefore, assets having cost of Rs 11.418 million (2015: Rs 3.862 million) and net book value of Rs 0.728 million (2015: Rs 0.313 million) have been retired from active use and have been written off in these financial statements.

47

4.1.4 The following operating fixed assets with a net book value exceeding Rs 50,000 were disposed of during the year:

Particulars Mode of disposal Cost Accumulated depreciation

Net book value

Sale proceeds / receivable

from insurance company

Gain / (loss) Particulars of purchasers

--------------------------------------(Rupees in ‘000)--------------------------------------

Vehicles Maturity of Company’s

maintained car scheme

1,839 1,471 368 875 507 Taimur Asif ButtEmployee of the Company

--do-- 1,209 967 242 578 336 Shaharyar Bin EjazEmployee of the Company

--do-- 567 267 300 271 (29) Asif IqbalEmployee of the Company

--do-- 732 353 379 344 (35) Hassan ImamEmployee of the Company

--do-- 796 399 397 402 5 zainab KaleemEmployee of the Company

--do-- 1,330 975 355 788 433 Waheedulla Khan Ex-Employee of the Company

--do-- 574 334 240 247 7 Muhammad AzeemEmployee of the Company

--do-- 742 341 401 401 - Kamran GhaffarEx-Employee of the Company

--do-- 1,300 874 426 426 - Usman Ali Employee of the Company

--do-- 883 607 276 317 41 zubairuddin KhanEmployee of the Company

--do-- 964 655 309 525 216 Abdul KarimEmployee of the Company

--do-- 500 298 202 202 - Arif KamranEmployee of the Company

--do-- 1,302 370 932 1,175 243 Kashan WaseemEx-Employee of the Company

--do-- 540 432 108 230 122 Mudassar HussanEmployee of the Company

--do-- 589 455 134 255 121 Shahzad QamarEmployee of the Company

--do-- 521 350 171 171 - Pir Abdul NasirEmployee of the Company

--do-- 1,583 545 1,038 1,300 262 Jamil AnwerEx-Employee of the Company

--do-- 1,049 364 685 750 65 Naseem AyazEx-Employee of the Company

--do-- 1,010 500 510 510 - Syed Ejaz Ali Employee of the Company

Bid 603 482 121 530 409 Muhammad Taimur DyerKarachi

--do-- 976 781 195 715 520 Salman SoomroKarachi

48

Particulars Mode of disposal Cost Accumulated depreciation

Net book value

Sale proceeds / receivable

from insurance company

Gain / (loss) Particulars of purchasers

------------------------------------(Rupees in ‘000)------------------------------------

--do-- 683 77 606 650 44 Rollins Industries (Pvt) LtdKotri

--do-- 3,111 2,217 894 2,130 1,236 Aly Diamond PiraniKarachi

--do-- 3,040 2,021 1,019 2,290 1,271 Murtaza Ali ViraniKarachi

--do-- 974 779 195 580 385 zahid AliKarachi

--do-- 16,998 13,372 3,626 23,845 20,219 Transpak EnterprisesKarachi

--do-- 2,923 2,100 823 3,250 2,427 Al-Shakoor TradersJaranwala

--do-- 355 284 71 305 234 Haji Shafiq KhanKarachi

--do-- 425 344 81 300 219 Fayyaz Ahmed KhanKarachi

--do-- 2,278 1,754 524 2,025 1,501 Noor KhanKarachi

Bid 2,073 1,658 415 1,775 1,360 Saleem KhanKarachi

--do-- 855 502 353 1,425 1,072 Ghazanfar Ali Employee of the Company

--do-- 119 60 59 1,150 1,091 Babu Khan Employee of the Company

--do-- 810 655 155 475 320 Noman FerozKarachi

--do-- 1,039 263 776 875 99 Shahnawaz FazalKarachi

Insurance Claim 5,913 623 5,290 5,811 521 Century Insurance Co LtdKarachi

Computer and accessories

Insurance Claim 115 42 73 96 23 Century Insurance Co LtdKarachi

Office and electrical equipment

Negotiation 810 598 212 368 156 S.A. Engineering

Karachi

Tools and equipment --do-- 595 491 104 111 7 Master Technologies

KarachiOthersItems having net Various 6,142 5,652 490 4,528 4,038 Various book value of less than Rs 50,000 each

2016 68,867 45,312 23,555 63,001 39,446

2015 47,089 33,115 13,974 24,501 10,527

49

4.1.5 Depreciation charge for the year has been allocated as follows:


Cost of sales 24.1 469,748 448,826 Selling and distribution costs 25 46,444 42,634 Administrative expenses 26 25,120 24,049

541,312 515,509

4.2 Capital work in progress

4.2.1 The following is a statement of capital work in progress:

Factory building on leasehold

land

Plant and machinery

Electric fittings and installation

Other assets

Total

----------------------------------(Rupees in ‘000)-------------------------------------

Balance as at July 1, 2014 9,724 84,427 354 5,186 99,691

Capital expenditure incurred during the year (note 4.2.2) 23,302 53,871 5,101 12,070 94,344

Transfers to operatingfixed assets (note 4.1.1) (4,746) (87,246) (1,121) (11,334) (104,447)

Balance as at June 30, 2015 28,280 51,052 4,334 5,922 89,588

Capital expenditure incurred during the year (note 4.2.2) 69,801 137,922 6,033 7,463 221,219

Transfers to operatingfixed assets (note 4.1.1) (16,616) (177,759) (5,568) (2,932) (202,875)

Balance as at June 30, 2016 81,465 11,215 4,799 10,453 107,932

4.2.2 This includes items in transit aggregating Rs 12.14 million (2015: Rs 5.491 million).

50

5. INTANGIBLE ASSETS Note Goodwill

and trade mark

Computer software

Total

------------------(Rupees in ‘000)---------------------At July 1, 2014Cost 43,500 67,587 111,087 Accumulated amortisation (43,500) (62,777) (106,277)Net book value - 4,810 4,810

Year ended June 30, 2015Additions - 6,247 6,247

- 11,057 11,057 Amortisation for the year 5.3 - (3,505) (3,505)Net book value as at June 30, 2015 - 7,552 7,552

Year ended June 30, 2016Additions - 6,955 6,955 - 14,507 14,507 Amortisation for the year 5.3 - (8,416) (8,416)Net book value as at June 30, 2016 - 6,091 6,091

At June 30, 2015Cost 43,500 73,834 117,334 Accumulated amortisation (43,500) (66,282) (109,782)Net book value - 7,552 7,552

At June 30, 2016Cost 43,500 80,789 124,289 Accumulated amortisation (43,500) (74,698) (118,198)Net book value - 6,091 6,091

5.1 Goodwill includes amount paid on acquisition of the brand “Sparkle” from Transpak Corporation Limited and a trade mark costing Rs 1.5 million in respect of the brand “Sparkle” purchased on January 4, 2001. The trade mark was fully amortised during the year ended June 30, 2005, however, it is still in active use.

5.2 Computer software is being amortised over a useful life of 3 years.

5.3 Amortisation charge for the year has been allocated as follows:


Cost of sales 24.1 1,137 530 Selling and distribution costs 25 5,208 921 Administrative expenses 26 2,071 2,054

8,416 3,505

51

6. LONG TERM LOANS


Considered good- due from executives 6.1 & 6.2 16,106 13,116 - due from other employees 6.2 31,200 18,787

47,306 31,903 Recoverable within one year 11 (16,631) (12,318)

30,675 19,585

6.1 Reconciliation of carrying amount of loans to executives:

Opening balance as at July 1, 2015 / 2014 13,116 6,489

Disbursements 11,374 12,549 Repayments (8,384) (5,922)Closing balance as at June 30 16,106 13,116

6.2 These loans are interest free and have been given to executives and other employees of the Company for purchase of house, vehicles or for personal use in accordance with their terms of employment. These loans are to be repaid over a period of two to five years in equal monthly installments. Any outstanding loan due from an employee at the time of leaving the service of the Company is adjustable against final settlement of staff provident fund.

6.3 Long term loans have been carried at cost as the effect of carrying these balances at amortised cost would not be material in the overall context of these financial statements.

7. LONG TERM SECURITY DEPOSITS

Long term security deposits 17,887 14,267

7.1 This includes Rs 5.783 million (2015: Rs 5.783 million) representing amount deposited with Water and Power Development Authority (WAPDA) for enhancement in electricity load for detergent unit at Kotri.

7.2 This includes a Term Deposit Receipt (TDR) amounting to Rs 1.7 million (2015: Rs 1.7 million) issued by a banking company. This TDR has been provided as a security (lien) to a banking company for issuance of guarantee in favour of Sui Southern Gas Company Limited. The TDR carries profit at the rate of 7.07% (2015: 7.07%) per annum and shall mature on September 1, 2016 at which time the management intends to rollover the TDR.

7.3 This includes an amount of Rs 16.187 million (2015: Rs 12.567 million) which do not carry any markup arrangement.

8. STORES AND SPARES

Stores 48,160 44,493 Spares 8.1 110,097 107,745

24.1.3 158,257 152,238

8.1 This includes spares in transit amounting to Rs 1.991 million (2015: Rs 0.637 million).

52

9. STOCK IN TRADENote 2016 2015

(Rupees in ‘000)Raw materials- in hand 652,813 936,526 - in bonded warehouse 64,239 143,214 - in transit 849,218 414,067

24.1.1 1,566,270 1,493,807 Packing materials- in hand 259,857 241,240 - in transit 2,731 27,424 - with third parties 1,854 1,717

24.1.2 264,442 270,381

Work in process 24.1 261,086 196,392

Finished goods- in hand 539,283 499,497 - in transit 1,053 938

24 540,336 500,435 Trading goods- in hand 180,727 143,141 - in transit 14,187 2,950

24 194,914 146,091 2,827,048 2,607,106

10. TRADE DEBTS

Considered good- due from related parties 10.1 3,086 4,054 - others 534,908 662,324

537,994 666,378 Considered doubtful- others 30,968 30,968

568,962 697,346 Less: Provision for impairment 10.4 30,968 30,968

537,994 666,378

10.1 Trade debts include the following amounts due from related parties:

Merit Packaging Limited 136 113 Tetley Clover (Private) Limited 2,058 3,330 Hasanali and Gulbanoo Lakhani Foundation 4 - SIZA (Private) Limited 13 5 Television Media Network (Private) Limited 841 567 Cyber Internet Services (Private) Limited 26 34 SIZA Foods (Private) Limited 3 3 SIZA Services (Private) Limited 5 2

3,086 4,054

10.2 The maximum aggregate amount of receivable due from related parties at the end of any month during the year was Rs 4.236 million (2015: Rs 4.129 million).

53

10.3 As at June 30, 2016, trade receivables of Rs 132.359 million (2015: Rs 138.67 million) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

2016 2015(Rupees in ‘000)

Upto 1 month 53,816 73,387 1 to 6 months 8,976 9,382 More than 6 months 69,567 55,901

132,359 138,670

10.4 As at June 30, 2016, trade receivables of Rs 30.968 million (2015: Rs 30.968 million) were impaired and provided for. The ageing of these receivables is as follows:


Five years and over 30,968 30,968

11. LOANS AND ADVANCES

Considered goodCurrent portion of long term loans- due from executives 5,299 4,464 - due from other employees 11,332 7,854

6 16,631 12,318 Advances- to employees 11.1 & 11.3 12,831 12,317 - to contractors and suppliers 11.2 & 11.3 179,125 140,186

208,587 164,821

11.1 Advances to employees are provided to meet business expenses and are settled as and when the expenses are incurred.

11.2 Advances include the following amounts due

from following related parties:

Princeton Travels (Private) Limited - 261 Television Media Network (Private) Limited - 25,235

- 25,496

11.3 The advances provided to employees, contractors and suppliers are interest free.

10.3.1 Ageing analysis of the amounts due from related parties is as follows:

upto 1 month

1 to 6 months

More than 6

months

As at June

30, 2016

As at June 30,

2015

---------------------------(Rupees in ‘000)------------------------

Merit Packaging Limited - 12 124 136 113 Television Media Network (Private) Limited 7 135 699 841 567 Tetley Clover (Private) Limited - - 2,058 2,058 3,330 Hasanali and Gulbanoo Lakhani Foundation - 4 - 4 - SIZA (Private) Limited 2 2 9 13 5 Cyber Internet Services (Private) Limited - - 26 26 34 SIZA Foods (Private) Limited - - 3 3 3 SIZA Services (Private) Limited 5 - - 5 2

14 153 2,919 3,086 4,054

54

12. TRADE DEPOSITS AND SHORT TERM PREPAYMENTS Note 2016 2015

(Rupees in ‘000)

Security deposits 12.1 20,485 11,955 Prepayments 90,162 21,005

110,647 32,960

12.1 These security deposits are interest free.

13. OTHER RECEIVABLES

Receivable from related parties 13.1 288 2,674 Sales tax claimable 6,222 6,187 Special excise duties claimable 8,720 8,720 Insurance claims receivable from New Jubilee General Insurance 747 502 Others 9 18

15,986 18,101

13.1 Other receivables include the following amounts due from related parties:

Tetley Clover (Private) Limited - 2,674 Century Insurance Company Limited 288 -

288 2,674

14. SHORT TERM INVESTMENTS

Investments - Loans and receivables (term deposits) 14.1 - 800,000 Investments - Held to maturity 14.2 1,925,262 - Investments - Available for sale 14.3 3,510,885 2,301,198

5,436,147 3,101,198

14.1 The range of rates of profits on these term deposits is between 7.15% and 7.50% per annum (2015: 7.30% per annum) matured in January 2016.

14.2 Name of the investment instrument / issuer

Maturity Effective interest rate

As at July 1, 2015

Purchase during the year

Redemption during

the year

As at June 30, 2016

Amortised cost as at June 30,

2016

------------------------- Number of units in ‘000 ------------------------- ------Rs in ‘000------

Treasury bills (T-Bills) Government of Pakistan

Between January 2016 and January 2017

Between 5.92% and 6.18%

- 50,500 (30,890) 19,610 1,925,262

14.2.1 Treasury bills have a nominal value of Rs 100,000 each.

55

14.3 Name of the investees As at July 1, 2015

Purchases during the

year

Bonus units

Sales / Redemptions

during the year

As at June 30,

2016

Average cost as at June 30,

2016

Fair value as at June 30, 2016

Unrealised gain as at June 30,

2016

---------------------- Number of units ‘000-------------------- --------------- Rupees in ‘000 ---------------Lakson Money Market Fund 7,990 15,862 - (11,859) 11,993 1,200,000 1,200,863 863 (associated undertaking)

Lakson Income Fund 7,935 18,859 163 (23,002) 3,955 400,000 400,000 - (associated undertaking)

UBL Government Securities Fund - 17,255 155 (12,657) 4,753 500,000 501,425 1,425

Atlas Money Market Fund 1,390 1,398 - (1,390) 1,398 700,000 700,293 293

Atlas Income Fund - 2,615 - (2,615) - - - -

ABL Government Securities Fund - 184,528 1,545 (136,269) 49,804 500,000 500,159 159

Pakistan Investment Bonds (PIBs) - - - - - 202,301 208,145 5,844

17,315 240,517 1,863 (187,792) 71,903 3,502,301 3,510,885 8,584

15. CASH AND BANK BALANCESNote 2016 2015

(Rupees in ‘000)With banks in current / saving accounts

- Local currency - Current accounts 15.1 548,166 325,833 - Saving accounts 15.2 521,662 557,496

1,069,828 883,329

Cheques in hand 52,185 52,177 Cash in hand 589 913

1,122,602 936,419

15.1 This includes an amount of Rs 7.399 million placed under an arrangement permissible under Shariah.

15.2 The range of rates of profit on these saving accounts is between 4% and 6% (2015: 5% and 7.07%) per annum.

56

16. SHARE CAPITAL

16.1 Authorised share capital

2016 2015 2016 2015Number of shares (Rupees in ‘000)

75,000,000 75,000,000 Ordinary shares of Rs 10 each 750,000 750,000

16.2 Issued, subscribed and paid-up share capital

2016 2015 2016 2015Number of shares (Rupees in ‘000)

Ordinary shares of Rs 10 each 5,882,353 5,882,353 fully paid in cash 58,824 58,824

Ordinary shares of Rs 10 each issued as fully paid bonus

42,072,576 42,072,576 shares 420,725 420,725 47,954,929 47,954,929 479,549 479,549

17. RESERVES2016 2015

(Rupees in ‘000)

Capital reserve- Share premium reserve 13,456 13,456

Revenue reserve - General reserve 7,428,000 6,403,000 - Unappropriated profit 2,819,048 2,224,032

10,247,048 8,627,032

10,260,504 8,640,488

18. DEFERRED TAXATION

Credit / (debit) balances arising in respect of timing differences relating to:Taxable temporary differenceAccelerated tax depreciation allowance 296,431 378,165 Intangibles - 624 Short term investments 1,288 150

297,719 378,939 Deductible temporary differenceProvision for compensated absences (9,253) (8,934)Intangibles (609) - Provision for impairment of trade debts (9,109) (9,121)Deferred liabilities (12,808) (12,808)

(31,779) (30,863)

265,940 348,076

57

18.1 The movement in temporary differences is as follows:

Balance as at July 1,

2014

Recognised in profit and loss

account

Recognised in other

comprehensive income

Balance as at June 30,

2015

Recognised in profit and loss account

Recognised in other

comprehensive income

Balance as at June 30, 2016

----------------------------------------------------(Rupees in ‘000)----------------------------------------------------------Deferred tax debits:Accelerated tax depreciation allowance 474,916 (96,751) - 378,165 (81,734) - 296,431 Intangibles - 624 - 624 (1,233) - (609)Short term investments (3,392) 14,214 (10,672) 150 - 1,138 1,288

471,524 (81,913) (10,672) 378,939 (82,967) 1,138 297,110 Deferred tax credits:Provision for compensated absences (8,594) (340) - (8,934) (319) - (9,253)Provision for impairment of trade debts (10,645) 1,524 - (9,121) 12 - (9,109)Deferred liabilities (13,046) 238 - (12,808) - - (12,808)

439,239 (80,491) (10,672) 348,076 (83,274) 1,138 265,940

19. LONG TERM DEPOSITSNote 2016 2015

(Rupees in ‘000)Deposits obtained from:- Distributors 46,139 22,988 - Transporters 500 500 - Others 2,005 2,005

48,644 25,493

19.1 These deposits are interest free and are not refundable during the subsistence of relationship with the Company.

20. DEFERRED LIABILITY

Defined benefit plan (staff retirement gratuity)- funded 20.4 2,683 37,088

20.1 As stated in note 2.11, the Company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent employees subject to attainment of retirement age and minimum service of prescribed period. Actuarial valuation of the scheme is carried out every year and the latest actuarial valuation was carried out as at June 30, 2016. The disclosures made in notes 20.2 to 20.15 are based on the information included in that actuarial report.

20.2 The actuarial valuation of gratuity plan was carried out as at June 30, 2016. The projected unit credit method using the following significant assumptions was used for this valuation:

2016 2015Percentage

- Discount rate - per annum compound 7.25 9.75 - Expected rate of increase in salaries - per annum

For next year 13.00 14.00 For subsequent years 6.25 8.75

58

20.3 Mortality rate

The rates assumed were based on the SLIC (2001-2005) mortality table.

20.4 Balance sheet reconciliation Note 2016 2015

(Rupees in ‘000)

Present value of defined benefit obligation 20.5 363,316 311,132 Fair value of plan assets 20.6 (360,633) (274,044)Net liability in the balance sheet 2,683 37,088

20.5 Movement in defined benefit obligation

Present value of defined benefitobligation as at July 1, 2015 / 2014 311,132 249,445

Current service cost 21,161 18,090 Interest cost 29,515 32,547 Remeasurement on obligation 18,346 18,655 Benefits paid (16,838) (7,605)Present value as at June 30 363,316 311,132

20.6 Movement in fair value of plan assets

Fair value as at July 1, 2015 / 2014 274,044 227,256 Expected return on plan assets 28,821 32,200 Remeasurement on fair value of plan assets 14,650 (16,936)Contributions made during the year to the fund 59,956 39,129 Benefits paid (16,838) (7,605)Fair value as at June 30 360,633 274,044

20.7 Movement in net liability in the balance sheet is as follows:

Balance of net liability as at July 1, 2015 / 2014 37,088 22,189 Charge for the year 20.9 21,855 18,437 Contributions made during the year to the fund (59,956) (39,129)Net remeasurement for the year 3,696 35,591 Balance of net liability as at June 30 2,683 37,088

20.8 Amounts chaged to profit and loss account:

Current service cost 21,161 18,090 Net Interest cost 694 347 Expenses 21,855 18,437

20.9 Charge for the year has been allocated as under:

Cost of sales 24.1 11,538 9,348 Selling and distribution costs 25 5,492 5,041 Administrative expenses 26 4,825 4,048

21,855 18,437

59

2016 2015(Rupees in ‘000)

20.10 Actual return on plan assets

Expected return on plan assets 28,821 32,200 Remeasurement on fair value of plan assets 14,650 (16,936)Actual return on plan assets 43,471 15,264

20.11 Plan assets comprise of the following:2016 2015

(Rs in ‘000) Percentage (Rs in ‘000) Percentage

Shares and units of mutual funds 90,095 24.98 35,526 12.96 Debt instruments 262,131 72.69 237,808 86.78 Cash at Banks 8,407 2.33 710 0.26

360,633 100.00 274,044 100.00

20.12 Expected contribution to defined benefit plan for the year ending June 30, 2016 is Rs 23.157 million (2015: Rs 22.869 million).

20.13 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on defined benefit obligationChange in assumption

Increase in assumption

Decrease in assumption

(Rupees in ‘000)

Discount rate 1% (29,655) 34,530 Salary growth rate 1% 34,340 (30,020)

20.14 The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the staff retirement gratuity recognised within the balance sheet.

20.15 The average duration of the defined benefit obligation is 9 years.

21. TRADE AND OTHER PAYABLES Note 2016 2015

(Rupees in ‘000)

Trade creditors 21.1 632,767 517,478 Accrued liabilities 21.2 1,050,920 872,908 Bills payable 414,075 215,479 Advances from distributors 58,598 43,184 Sales tax payable 54,391 27,068 Royalty payable to an associated undertaking 152,147 125,429

Workers’ profits participation fund 21.3 224,560 175,827 Workers’ welfare fund 86,246 66,814 Retention money payable 3,831 3,173 Unclaimed dividend 6,084 4,650 Others 21.4 29,175 27,414

2,712,794 2,079,424

60

21.1 This includes Rs 119.93 million (2015: Rs 35.485 million) payable to related parties.


21.3 Workers’ profits participation fund Note 2016 2015

(Rupees in ‘000)

Balance at the beginning of the year 175,827 132,071 Allocation for the year 27 224,560 175,827

400,387 307,898 Less: Payments during the year 175,827 132,071 Balance at the end of the year 224,560 175,827


22. SHORT TERM RUNNING FINANCES

22.1 The Company has arranged short-term borrowing facilities from various banks on mark-up basis to the extent of Rs 1,240 million (2015: Rs 1,040 million), which can be interchangeably utilised as running finance facilities or import credit facilities. These facilities expired during the year and were renewed subsequently. The renewed facilities are available for various periods upto March 31, 2017. The arrangements are secured by a joint hypothecation of stocks, stores and spares, trade debts, other current assets and second charge on immovable assets of the Company.

22.2 The mark-up on short term running facilities ranges between 7.10% and 8.00% (2015: 7.83% and 9.74%) per annum.

22.3 The facilities for opening letters of credit and guarantees as at June 30, 2016 aggregated Rs 4,600 million and Rs 100 million (2015: Rs 3,800 million and Rs 80 million) respectively of which the amounts remaining unutilised at the year end were Rs 4,232.735 million and Rs 62.016 million (2015: Rs 3,388.844 million and Rs 47.069 million) respectively.

23. CONTINGENCIES AND COMMITMENTS

23.1 Contingencies

23.1.1 Certain cases have been filed against the Company by some employees claiming Rs 3.248 million (2015: Rs 0.784 million) in aggregate. Provision has not been made in these financial statements for the said amount as the management of the Company, based on the advice of its legal counsel handling the subject cases, is of the opinion that matters shall be decided in the Company’s favour.

23.1.2 Post dated cheques have been issued to custom authorities as a security in respect of duties and taxes amounting to Rs 19.758 million (2015: Rs 188.456 million) payable at the time of exbonding of imported goods. Further, the custom authorities has withheld cheques which became due during the year amounting to Rs 134.420 million on account of claim in relation to custom duty, sales tax and income tax made by custom authorities as mentioned in note 23.1.3 below.

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23.1.3 During the current year, the Company received a letter dated December 21, 2015 from the Directorate of Input Output Co-Efficient Organisation, Federal Board of Revenue stating that the conditions for claiming the exemption on import of a raw material during the year ended June 30, 2015 under SRO 565(1) / 2006 (SRO) were not fulfilled and sought an explanation from the Company as to why Custom Duty of Rs 560.964 million, Sales Tax of Rs 93.971 million and Income Tax of Rs 8.237 million remitted under SRO may not be recovered from the Company. Further, the Company has filed a constitutional petition No. D - 3134 of 2016 in the High Court of Sindh dated May 28, 2016 and has obtained a stay order dated May 31, 2016 to restrain the custom authorities from taking any coercive action against the Company. The management of the Company, based on its discussion with tax and legal consultants, is confident that its submissions shall be accepted and no demand will be raised against the Company.

23.1.4 During the year 2011, the Gas Infrastructure Development Cess (GIDC) was levied at Rs 13 per unit of gas consumption through the Gas Infrastructure Development Cess Act, 2011 (the Act) . The rate was increased to Rs 100 per unit w.e.f. July 2012 whereas subsequently it was reduced to Rs 50 per unit through a notification dated September 7, 2012. The High Court of Sindh through its order dated September 19, 2012, however, has restrained Sui Southern Gas Company Limited (SSGCL), being the company required to charge and collect the cess, from charging cess over and above Rs 13 per unit from the Company. In case of a separate petition on June 13, 2013, the GIDC Act was declared unconstitutional by the Peshawar High Court (PHC) and such judgment was also upheld by the Supreme Court on August 22, 2014.

On September 25, 2014, the Gas infrastructure Development Cess Ordinance, 2014 (the GIDC Ordinance) was promulgated which levied GIDC at Rs 150 per unit. Section 8 of the Ordinance interlia states that notwithstanding anything to the contrary contained in any decree of any court, the cess levied under the Act shall be deemed to have been validly levied under the provision of the Ordinance (i.e. retrospective application). The Company has filed a petition to invalidate the promulgation of the Ordinance which is pending adjudication. In the meantime on the basis of the Company’s application on October 20, 2014, the High Court of Sindh issued a stay order in favour of the Company refraining SSGCL from collecting GIDC under the GIDC Ordinance.

On May 23, 2015, the Gas infrastructure Development Cess Act, 2015 (the new GIDC Act) was promulgated which levied GIDC at Rs 100 per unit. Section 8 of the new GIDC Act interlia states that notwithstanding anything to the contrary contained in any decree of any court, the cess levied under the new GIDC Act shall be deemed to have been validly levied under the provision of the new GIDC Act (i.e. retrospective application). On June 29, 2015, the Company has filed a petition to invalidate the promulgation of the new GIDC Act which is pending adjudication.

The amount of cess if determined to be payable by the Company with retrospective i.e w.e.f 2011 effect shall aggregate to Rs 58 million approximately, however the Company, based on the advice of its legal counsel, is confident of a favorable outcome of the aforementioned applications to the High Court of Sindh and, therefore, has not provided for the amount of Rs 58 million in these financial statements.

23.1.5 Contingent liabilities in respect of indemnities given to financial institutions for guarantees issued by them on behalf of the Company in the normal course of business aggregate Rs 37.948 million (2015: Rs 32.931 million).

23.2 Commitments

23.2.1 Commitments in respect of capital expenditure and inventory items amount to Rs 56.536 million and Rs 547.060 million respectively (2015: Rs 4.826 million and Rs 359.828 million respectively).

23.2.2 Outstanding letters of credit amount to Rs 240.406 million (2015: Rs 350.492 million).

23.2.3 Outstanding duties leviable on clearing of stocks amount to Rs 10.576 million (2015: Rs 10.849 million).

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24. COST OF SALESNote 2016 2015

(Rupees in ‘000)Opening stock of finished goods

(including trading goods) 646,526 657,033 Cost of goods manufactured 24.1 13,755,443 13,629,411 Purchases of trading goods 2,835,686 2,991,279

17,237,655 17,277,723

Less: Closing stock of finished goods 9 735,250 646,526 (including trading goods) 16,502,405 16,631,197

24.1 Cost of goods manufactured

Opening stock of work in process 196,392 360,531 Raw materials consumed 24.1.1 & 24.1.4 8,818,744 8,821,060 Packing materials consumed 24.1.2 & 24.1.4 2,961,066 2,778,634 Stores and spares consumed 24.1.3 67,941 59,552 Salaries, wages and other benefits 782,417 649,907 Staff retirement gratuity 20.9 11,538 9,348 Provident fund 12,457 11,170 Power and fuel 349,423 348,312 Repairs and maintenance 34,216 27,333 Rent, rates and taxes 13,202 11,547 Insurance 43,762 41,724 Laboratory expenses 6,471 5,374 Cartage 188,403 202,939 Depreciation 4.1.5 469,748 448,826 Amortisation 5.3 1,137 530 Other manufacturing expenses 59,612 49,016

14,016,529 13,825,803 Less: Closing stock of work in process 9 261,086 196,392

13,755,443 13,629,411

24.1.1 Raw materials consumed

Opening stock 1,493,807 1,225,299 Purchases 8,891,207 9,089,568

10,385,014 10,314,867 Less: Closing stock 9 1,566,270 1,493,807

8,818,744 8,821,060

24.1.2 Packing materials consumed

Opening stock 270,381 230,383 Purchases 2,955,127 2,818,632

3,225,508 3,049,015 Less: Closing stock 9 264,442 270,381

2,961,066 2,778,634

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24.1.3 Stores and spares consumed

Opening stock 152,238 125,720 Purchases 73,960 86,070

226,198 211,790 Less: Closing stock 8 158,257 152,238

67,941 59,552

24.1.4 Cost of sales includes amounts written off during the year in respect of the following:

Raw materials 11,642 24,522 Packing materials 9,672 1,798 Finished goods 6,904 1,014 Stores and spares 2,079 3,389

30,297 30,723

25. SELLING AND DISTRIBUTION COST

Salaries, wages and other benefits 440,332 404,965 Staff retirement gratuity 20.9 5,492 5,041 Provident fund 13,569 12,283 Travelling and conveyance 48,586 48,930 Repairs and maintenance 6,061 7,776 Vehicle running expenses 100,100 127,913 Advertising and sales promotion 3,154,921 2,543,226 Royalty on sale of licensed products 125,037 114,324 Postage, telephone and internet charges 16,306 16,515 Rent, rates and taxes 88,806 80,067 Printing and stationery 5,052 5,507 Subscription and membership 773 1,311 Legal and professional 798 979 Freight 733,767 727,292 Electricity 11,884 12,378 Insurance 40,145 36,160 Security service charges 8,639 6,635 Depreciation 4.1.5 46,444 42,634 Amortisation 5.3 5,208 921 Other expenses 12,836 17,688

4,864,756 4,212,545 Charge from related parties 5,891 1,703

4,870,647 4,214,248

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26. ADMINISTRATIVE EXPENSESNote 2016 2015

(Rupees in ‘000)

Salaries, wages and other benefits 171,148 140,397 Staff retirement gratuity 20.9 4,825 4,048 Provident fund 6,743 5,652 Travelling and conveyance 11,018 6,828 Repairs and maintenance 21,551 17,901 Vehicle running expenses 10,983 11,038 Postage, telephone and internet charges 9,097 6,176 Rent, rates and taxes 9,876 6,380 Printing and stationery 3,842 3,568 Subscription and membership 14,798 6,300 Legal and professional 3,568 3,572 Electricity 5,616 5,317 Insurance 10,053 9,155 Security service charges 5,814 4,899 Depreciation 4.1.5 25,120 24,049 Amortisation 5.3 2,071 2,054 Others 1,267 800

317,390 258,134 Charge from related parties 8,141 10,177

325,531 268,311

27. OTHER EXPENSES

Workers’ profits participation fund 21.3 224,560 175,827 Workers’ welfare fund 27.1 86,246 65,922 Auditors’ remuneration 27.2 2,116 2,119 Property, plant and equipment - written off 4.1.1 728 313 Donations 27.3 18,835 18,745 Advances to employees written off 74 - Others 4,287 -

336,846 262,926

27.1 Workers’ welfare fundCharge for the year 86,246 66,814 Prior year - (892)

86,246 65,922

27.2 Auditors’ remuneration

Audit fee 943 873 Fee for half yearly review 410 380 Tax and others 312 418

1,665 1,671 Out of pocket expenses 451 448

2,116 2,119

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27.3 Donations include the following in which certain directors are interested:

Name of director Interest Name and address of donee

Note 2016 2015in donee (Rupees in ‘000)

Mr. Iqbal Ali Lakhani (See note 1 below)

Special Olympics Pakistan, 205, Sunset Tower, Sunset Boulevard, DHA, Phase-II, Karachi

- 25

Note 1: Spouse of Mr. Iqbal Ali Lakhani is the Program Chief Executive of the donee organisation.

Mr. Zulfiqar Ali Lakhani, Mr. Amin Mohammed Lakhani and Mr. Iqbal Ali Lakhani

(See note 2 below)

Hasanali and Gulbanoo Lakhani Foundation

18,000 18,000

Note 2: The above mentioned directors are trustees of Hasanali and Gulbanoo Lakhani Foundation

28. OTHER INCOME

Income from financial assetsProfit on saving accounts 28.1 48,593 54,499 Profit on treasury bills 22,283 - Profit on a term deposit receipt 9,955 1,401 Profit on PIBs 5,270 - Net exchange gain 28.2 161 2,262 Gain on disposal of short term investments 252,780 254,307 Liabilities no longer payable written back - 52 Others 138 36

339,180 312,557

Income from non-financial assetsInsurance commission 17,631 22,634 Gain on disposal of items of property, plant and equipment 4.1.4 39,446 10,527 Sale of scrap 20,670 16,001

77,747 49,162 416,927 361,719

28.1 This profit is earned from bank accounts under mark up arrangements.

28.2 The net exchange gain comprises of income from fluctuations in foreign currency related to foreign currency balances.

28.3 Profit and / or gain on disposal of short term investments are earned from Shariah non-compliant arrangements.

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30. TAXATION2016 2015

(Rupees in ‘000)

Current- for the year 1,442,866 1,136,969 - for prior years (2,490) (3,857)

1,440,376 1,133,112 Deferred tax (83,274) (80,491)

1,357,102 1,052,621

30.1 Reconciliation between the average effective tax rate and the applicable tax rate.

2016 2015Percentage

Applicable tax rate 32.00 33.00 Tax effect of income assessed under final tax regime (1.29) (1.08)Tax effect of change in statutory tax rate for next years (0.44) (1.93)Tax credits (0.82) (0.79)Tax effect due to impact of super tax 3.11 3.06

32.56 32.26 Tax effect of income tax provision relating to prior years (0.06) (0.12)

32.50 32.14

30.2 The Board of Directors in their meeting held on July 28, 2016 has proposed sufficient cash dividend for the year ended June 30, 2016 (refer note 34). Accordingly, no provision for tax on undistributed reserves under section 5A of the Income Tax Ordinance, 2001 has been recognised in these financial statements for the year ended June 30, 2016.

29. FINANCE COST AND BANK CHARGES2016 2015

(Rupees in ‘000)

Markup on short term borrowings - 3 Guarantee commission 547 527 Bank commission and other charges 22,929 19,880

23,476 20,410

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31. EARNINGS PER SHARE2016 2015

(Rupees in ‘000)

Profit after taxation 2,818,889 2,222,168

(Number of shares)

Weighted average number of ordinary shares outstanding during the year 47,954,929 47,954,929

2016 2015(Rupees)

Earnings per share 58.78 46.34

31.1 There are no dilutive potential ordinary shares outstanding as at June 30, 2016 and 2015.

32. CASH GENERATED FROM OPERATIONS Note 2016 2015

(Rupees in ‘000)

Profit before taxation 4,175,991 3,274,789

Adjustment for non-cash charges and other items:

Depreciation expense 541,312 515,509 Amortisation expense 8,416 3,505 Gain on disposal of items of property, plant and equipment (39,446) (10,527)Staff retirement gratuity 21,855 18,437 Profit on saving accounts (48,593) (54,499)Profit on a term deposit receipt (9,955) (1,401)Profit on treasury bills (22,283) - Profit on PIBs (5,270) - Gain on disposal of short term investments (252,780) (254,307)Finance cost - 3 Liabilities no longer payable written back - (52)Stocks in trade written off 28,218 27,334 Advances to employees written off 74 - Stores and spares written off 2,079 3,389 Property, plant and equipment written off 728 313 Working capital changes 32.1 384,650 (133,785)

4,784,996 3,388,708

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32.1 Working capital changes

(Increase) / decrease in current assets:

Stores and spares (8,098) (29,907)Stock in trade (248,160) (161,194)Trade debts 128,384 (13,375)Loans and advances (43,840) (41,923)Trade deposits and short term prepayments (77,687) 6,167 Other receivables 2,115 7,648

(247,286) (232,584)Increase in current liabilities:

Trade and other payables 631,936 98,799 384,650 (133,785)

33. CASH AND CASH EQUIVALENTS

Cash and bank balances 15 1,122,602 936,419 Short term investments - Term Deposit Receipts (TDRs) 14 - 800,000 Short term investments - Held to maturity 14 675,625 -

1,798,227 1,736,419

34. PROPOSED DIVIDEND

The Board of Directors in their meeting held on July 28, 2016 has proposed a cash dividend of Rs 30 per share (2015: Rs 25 per share) for the year ended June 30, 2016, amounting to Rs 1,438.648 million (2015: Rs 1,198.873 million) and transfer of unappropriated profit to general reserve amounting to Rs 1,380 million (2015: Rs 1,025 million) subject to the approval of members at the annual general meeting. The effect of such dividend and transfer shall be accounted for in the financial statement for the year ending June 30, 2017.

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35. RELATED PARTY DISCLOSURES

35.1 Disclosure of transactions between the Company and related parties

The related parties comprise associated companies, staff retirement funds, directors and key management personnel. The Company in the normal course of business carries out transactions with various related parties. The Company enters into transactions with related parties on the basis of mutually agreed terms. Significant balances and transactions with related parties are as follows:

Nature of transactions Relationship 2016 2015with the Company (Rupees in ‘000)

Sale of goods, services provided and Associates reimbursement of expenses 5,822 32,077

Purchase of goods, services received Associates and reimbursement of expenses 1,661,029 1,580,684

Rent, allied and other charges Associates 32,969 26,853

Purchase of short term investments Associate 3,600,000 3,700,000

Sale proceeds on redemption of Associate short term investments 3,488,972 3,250,000

Profit on short term investments Associate 111,028 159,706

Royalty charges Associate 125,037 114,324

Sale of property, plant and equipment Associate - 39

Purchase of property, plant and equipment Associates 6,251 3,171

Expense in relation to staff retirement gratuity fund Employees fund 21,855 18,437

Expense in relation to provident fund Employees fund 32,769 29,105

Donations Associate 18,000 18,025

Compensation paid to key management personnel Key management personnel See note 36.1

Insurance claims received Associate 7,396 18,626

Insurance commission income Associate 17,631 22,634

Dividend paid Associates 1,054,371 716,973

35.2 The related party status of outstanding balances as at June 30, 2016 are included in trade debts (note 10), loans and advances (note 11), other receivables (note 13), investments (note 14) and trade and other payables (note 21). These are to be settled in the ordinary course of business. The receivables and payables are primarily unsecured in nature and bear no interest.

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36. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES 36.1 The aggregate amount charged in these financial statements for remuneration, including certain benefits

to the chief executive, the director and executives of the Company, are as follows:

Chief Executive Director Executives2016 2015 2016 2015 2016 2015

-------------------------------------(Rupees in ‘000)-------------------------------

Managerial remuneration 8,190 6,930 2,419 3,205 243,621 200,972 Bonus / commission - - 557 518 67,225 39,873 Staff retirement gratuity - - 561 811 3,005 3,651 Provident fund - - 102 289 20,514 16,708 Housing 3,510 2,970 1,089 1,442 109,693 90,506 Utilities 1,627 1,384 - - - - Motor vehicles 658 960 238 330 17,211 31,594 Others - - 251 270 37,018 17,998

13,985 12,244 5,217 6,865 498,287 401,302

Number of persons 1 1 1 1 207 175

36.2 The Chief Executive, a working director and the executives of the Company are also provided with Company maintained cars.

36.3 The Company considers its Chief Executive and the Executive Director as its key management personnel.

36.4 No remuneration is paid to any other director.

37. FINANCIAL INSTRUMENTS BY CATEGORY2016 2015

(Rupees in ‘000)FINANCIAL ASSETSLoans and receivables at amortised costLong term loans 30,675 19,585 Long term security deposits 17,887 14,267 Trade debts 537,994 666,378 Loans 16,631 12,318 Trade deposits 20,485 11,955 Other receivables 1,044 3,194 Accrued profit 4,425 1,482 Short term investments - 800,000 Cash and bank balances 1,122,602 936,419

1,751,743 2,465,598

Held to maturityShort term investments 1,925,262 -

Available for saleShort term investments 3,510,885 2,301,198

7,187,890 4,766,796 FINANCIAL LIABILITIESFinancial liabilities at amortised costLong term deposits 48,644 25,493 Trade and other payables 2,288,999 1,766,531

2,337,643 1,792,024

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38. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

38.1 The Company’s activities expose it to certain financial risks. Such financial risks emanate from various factors that include, but not limited to, market risk, credit risk and liquidity risk. The Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. Risks measured and managed by the Company are explained in notes 38.1.1, 38.1.2 and 38.1.3 below:

38.1.1 Credit risk and concentration of credit risk

Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail to perform as contracted.

Out of the total financial assets of Rs 7,187.89 million (2015: Rs 4,766.796 million), the financial assets that are subject to credit risk aggregated to Rs 5,053.894 million (2015: Rs 4,765.883 million).

The analysis below summarises the credit quality of the Company’s financial assets as at June 30, 2016 / 2015.

The bank balances along with credit ratings are tabulated below:2016 2015

Credit ratings (Rupees in ‘000)

A-1+ 1,121,409 881,005 Others 604 55,414

1,122,013 936,419

The analysis of credit rating of investees’ in relation to short term investments is as follows:

2016 2015Credit ratings (Rupees in ‘000)

A-1+ 500,159 800,000 A+(f) - 800,471 AA(f) - 1,500,727

500,159 3,101,198 Management Quality ratings

AM2 1,201,718 - AM2- 1,600,863 -

3,302,740 3,101,198

Long term security deposits are held with parties which have long association with the Company and have a good credit history.

For trade debts, internal risk assessments process determines the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are fixed by the management based on internal or external ratings. The utilisation of credit limits is regularly monitored. Accordingly the credit risk is minimal and the Company also believes that it is not exposed to major concentration of credit risk.

The breakup of amount due from customers other than related parties as stated in note 10 is presented below:

2016 2015(Rupees in ‘000)

Due from customers other than related parties Institutional customers 472,400 480,792 Distributors 70,803 195,736 Others 22,673 16,764

565,876 693,292

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Out of Rs 565.876 million (2015: Rs 693.292 million), the Company has provided Rs 30.968 million (2015: Rs 30.968 million) as the amounts being doubtful to be recovered from certain customers.

The balances of financial assets held with related parties other than short term investments are as follows:

2016 2015(Rupees in ‘000)

Trade debts 3,086 4,054 Other receivables 288 2,674

3,374 6,728

Concentration of credit risk exists when changes in economic and industry factors similarly affect the group of counter parties whose aggregated credit exposure is significant in relation to the Company’s total credit exposure. The Company’s financial assets are broadly diversified and transactions are entered into with diverse credit worthy parties thereby mitigating any significant concentration risk. Therefore, the Company believes that it is not exposed to major concentration of credit risk

38.1.2 Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulties in raising funds to meet commitments associated with financial instruments. The management believes that it is not exposed to any significant level of liquidity risk.

The management forecasts the liquidity of the Company on basis of expected cash flow considering the level of liquid assets necessary to meet such risk.

Financial liabilities in accordance with their contractual maturities are presented below: Non-interest / mark-up bearing

Maturity within one year

Maturity after one year Total

June 30, 2016------------------------(Rupees in ‘000)-----------------------

Financial liabilitiesLong term deposits - 48,644 48,644 Trade and other payables 2,288,999 - 2,288,999

2,288,999 48,644 2,337,643

June 30, 2015------------------------(Rupees in ‘000)-----------------------

Financial liabilitiesLong term deposits - 25,493 25,493 Trade and other payables 1,766,531 - 1,766,531

1,766,531 25,493 1,792,024

38.1.3 Market Risk

Currency Risk

Currency risk arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The Company primarily has foreign currency exposures in US Dollars (USD) and Euro.

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At June 30, 2016, had Pakistani rupees weakened / strengthened by 5% against the USD and Euro with all other variables held constant, profit before taxation for the year would have been lower / higher by Rs 20.704 million (2015: Rs 10.774 million). This will mainly result due to foreign exchange gains / losses on translation of USD and Euro denominated bills payables.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate due to changes in market interest rates.

l Fair value risk - Presently, fair value risk to the Company arises from TDRs, T-Bills, PIBs and cash with banks in saving accounts which are based on fixed interest rates. As at June 30, 2016, had there been increase / decrease in fixed interest rates by 100 basis points, with all other variables held constant, the profit before tax for the year would have been higher / lower by Rs 20.773 million (2015: Rs 13.575 million)

l Future cash flow risk - Presently, the Company is not exposed to future cash flow risk.

Other price risk

Other price risk is the risk of changes in the fair value of investment in mutual funds as the result of changes in the levels of net asset value of units held by the Company. As at June 30, 2016, had there been increase / decrease in net asset value by 1%, with all other variables held constant, the profit before tax for the year would have been higher / lower by Rs 33.027 million (2015: Rs 23.012 million).

38.1.4 Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

As at June 30, 2016, all financial assets and financial liabilities are carried at amortised cost except for investment in mutual funds and PIBs which are carried at their fair values.

The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the

a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

c) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfer has occurred.

The Company’s policy for determining when transfers between levels in the hierarchy have occurred includes monitoring of the following factors:

l changes in market and trading activity (eg. significant increases / decreases in activity)

l changes in inputs used in valuation techniques (eg inputs becoming / ceasing to be observable in the market)

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There were no transfers between level 1, 2 or 3 of the fair value hierarchy during the year.

The valuation techniques used are as follows:

Level 1: Quoted prices (unadjusted) in active markets

The fair value of financial instruments traded in active markets is based on Net Asset Values (NAVs) of the units of the mutual funds at the reporting date. A market is regarded as active when it is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included within level 1 that are observable

Level 2 fair values for debt securities are determined using a discounted cash flow technique, which uses expected cash flows and a market-related discount rate (PKRV rates for the purpose).

The following table analysis within the fair value hierarchy of the Company’s financial assets (by class) measured at fair value at June 30, 2016:

2016 Financial assets Level 1 Level 2 Level 3 Total

------------------------------Rupees------------------------------

Financial investments: Available for sale 3,302,740 208,145 - 3,510,885

2015 Financial assets Level 1 Level 2 Level 3 Total

------------------------------Rupees------------------------------

Financial investments: Available for sale 2,301,198 - - 2,301,198

39. CAPITAL RISK MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Company manages its capital risk by monitoring its debt levels and liquid assets and keeping in view future investment requirements and expectation of the shareholders.

As at June 30, 2016 and 2015, the Company had surplus reserves to meet its requirements.

40. ENTITY-WIDE INFORMATION

40.1 The Company constitutes of a single reportable segment, the principal classes of products of which are Personal Care, Home Care and Others.

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40.2 Information about products

The Company’s principal classes of products accounted for the following percentages of sales:

2016 2015

Personal Care 23% 22%Home Care 74% 74%Others 3% 4%

100% 100%

40.3 Information about geographical areas

The Company does not hold non-current assets in any foreign country. Revenues from external customers attributed to foreign countries in aggregate are not material in the overall context of these financial statements.

40.4 Information about major customers

The Company does not have transactions with any external customer which amount to 10 percent or more of its revenues.

41. PLANT CAPACITY AND ACTUAL PRODUCTION

2016 2015(Quantities in tons)

Capacity 236,900 233,900

Production 172,669 155,346

Actual production was sufficient to meet the demand.

42. PROVIDENT FUND RELATED DISCLOSURES

The following information is based on latest un-audited financial statements of the Fund:

2016 2015

(Rupees in ‘000)

Size of the fund - Total assets 574,978 510,635

Cost of investments made 525,935 466,491

Percentage of investments made 98% 100%

Fair value of investments 564,954 510,635

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42.1 The break-up of fair value of investments is:

2016 2015(Rs in ‘000) ----%---- (Rs in ‘000) ----%----

Shares in listed companies 27,451 4.77% 23,179 4.54%Bank balances 10,023 1.74% 1,859 0.36%Government securities 349,108 60.72% 145,384 28.47%Debt securities 14,002 2.44% 257,260 50.38%Mutual funds 174,394 30.33% 82,953 16.25%

574,978 100.00% 510,635 100.00%

42.2 The investments out of provident fund have been made in accordance with the provisions of section 227 of the Companies Ordinance, 1984 and the rules formulated for this purpose.

43. NUMBER OF EMPLOYEES

The total and average number of employees during the year and as at June 30, 2016 and 2015 respectively are as follows:

2016 2015No of employees

Average number of employees during the year 698 723

Number of employees as at June 30 692 711

44. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on July 28, 2016 by the board of directors of the Company.



77


Pattern of Shareholding

TotalNo. of Shareholdings Shares Held

Shareholders From To

441 1 100 Shares 10,447 159 101 500 Shares 44,354 69 501 1,000 Shares 53,564 90 1,001 5,000 Shares 185,889 13 5,001 10,000 Shares 81,097 1 10,001 15,000 Shares 11,360 5 15,001 20,000 Shares 87,450 1 20,001 25,000 Shares 24,442 1 40,001 45,000 Shares 42,782 1 65,001 70,000 Shares 65,546 2 160,001 165,000 Shares 325,689 1 1,470,001 1,475,000 Shares 1,471,562 1 2,320,001 2,325,000 Shares 2,322,291 1 2,540,001 2,545,000 Shares 2,542,808 1 5,840,001 5,845,000 Shares 5,841,299 1 8,330,001 8,335,000 Shares 8,334,616 1 12,120,001 12,125,000 Shares 12,123,267 1 14,385,001 14,390,000 Shares 14,386,466

790 Total 47,954,929

Held by the shareholders as at June 30, 2016Incorporation Number KAR-5010 OF 1977-78

CUIN Registration NO. 005832

Categories of Shareholders Shares Held Percentage

Directors, Chief Executive Officer, and their spouses and 2,338,893 4.88minor children

Associated Companies, undertakings and related parties 27,795,811 57.96

NIT and ICP 201 - Banks, Development Financial Institutions, Non Banking 2,287 0.01Financial Institutions, Insurance Companies

Modarabas and Mutual Funds 1,016 -

Shareholders holding 10% 40,685,648 84.84

General Public a. Local 833,892 1.74b. Foreign - -

Others 16,982,829 35.41

NOTE: Some of the shareholders are reflected in more than one category.

78

Details of Pattern of Shareholding as per Requirements of Code of Corporate Governancei) ASSOCIATED COMPANIES, UNDERTAKINGS SHARES HELD AND RELATED PARTIES 1. SIZA (Pvt) Limited 8,334,616 2. SIZA Services (Pvt) Limited 12,123,267 3. SIZA Commodities (Pvt) Limited 1,471,562 4. Premier Fashions (Pvt) Limited 5,841,299 5. Century Insurance Company Limited 17,639 6. Sultan Ali Lakhani 337 7. Shaista Sultan Ali Lakhani 536 8. Babar Ali Lakhani 2,880 9. Bilal Ali Lakhani 944 10. Danish Ali Lakhani 1,662 11. Anushka Zulfiqar Lakhani 436 12. Anika Amin Lakhani 633

ii) MUTUAL FUND CDC – Trustee AKD Index Tracker Fund 1,016

iii) DIRECTORS AND THEIR SPOUSES AND MINOR CHILDREN

1. Iqbal Ali Lakhani Chairman/Director 2,327,687 2. Zulfiqar Ali Lakhani Director/Chief Executive 1,565 3. Amin Mohammed Lakhani Director 5,260 4. Tasleemuddin Ahmed Batlay Director 1,956 5. Aliya Saeeda Khan Director 1,000 6. Lisa Mather Nominee of Colgate-Palmolive - Company, USA 7. Vinod Nambiar Nominee of Colgate-Palmolive - Company, USA 8. Ronak Iqbal Lakhani W/o. Iqbal Ali Lakhani 498 9. Fatima Lakhani W/o. Zulfiqar Ali Lakhani 310 10. Saira Amin Lakhani W/o. Amin Mohammed Lakhani 617 iv) EXECUTIVES 3,095

v) PUBLIC SECTOR COMPANIES AND CORPORATIONS NIL

vi) BANKS, DEVELOPMENT FINANCE INSTITUTIONS, NON-BANKING FINANCE COMPANIES, INSURANCE COMPANIES, TAKAFUL, MODARABASAND PENSION FUNDS AND: 2,488

[Other than those reported at i (5)

vii) SHAREHOLDERS HOLDING 5% OR MORE

Colgate-Palmolive Co., USA. 14,386,466 Arisaig India Fund Limited, Hongkong 2,542,808 [Other than those reported at i(1), i(2) & i(4)]

viii) INDIVIDUALS AND OTHER THAN THOSEMENTIONED ABOVE 884,352 47,954,929

79

Operating and Financial Highlights

BALANCE SHEET 2015- 2016 2014- 2015 2013- 2014 2012- 2013 2011- 2012 2010-2011-----------------------------------------------(Rupees in ‘000)----------------------------------------------

Property, plant and equipment 2,769,966 2,935,589 3,147,236 3,185,014 2,863,125 2,680,784

Intangible assets 6,091 7,552 4,810 4,987 6,341 18,775

Long term loans and security deposits 48,562 33,852 28,893 27,146 20,164 22,709 2,824,619 2,976,993 3,180,939 3,217,147 2,889,630 2,722,268

Current assets 10,882,809 8,566,704 7,026,946 5,986,094 5,006,017 3,687,865 Current liabilities 2,712,794 2,079,424 1,979,991 2,067,693 1,867,801 1,668,040

8,170,015 6,487,280 5,046,955 3,918,401 3,138,216 2,019,825 TOTAL ASSETS EMPLOYED 10,994,634 9,464,273 8,227,894 7,135,548 6,027,846 4,742,093

REPRESENTED BY

EquityPaid-up capital 479,549 479,549 479,549 435,954 363,295 315,909 Reserves 10,260,504 8,640,488 7,233,554 6,194,232 5,186,354 4,054,720 Remeasurement on post retirement benefits obligation (69,982) (67,469) (43,623) (26,738) (16,596) (15,322)Surplus on revaluation of investments 7,296 1,048 75,754 27,970 3,189

10,677,367 9,053,616 7,745,234 6,631,418 5,536,242 4,355,307

Non-Current liabilitiesLong term loans,deposits, deferred tax and deferred liability 317,267 410,657 482,660 504,130 491,604 386,786

317,267 410,657 482,660 504,130 491,604 386,786 10,994,634 9,464,273 8,227,894 7,135,548 6,027,846 4,742,093

PROFIT AND LOSS ACCOUNT Turnover 33,135,291 31,174,591 29,367,346 25,515,265 23,327,820 18,132,057

Less : Sales tax & sed 5,278,903 4,962,757 4,668,503 3,869,346 3,464,671 2,994,755 : Trade discounts 2,038,419 1,901,672 1,472,757 1,378,479 1,154,438 986,882

7,317,322 6,864,429 6,141,260 5,247,825 4,619,109 3,981,637 Net turnover 25,817,969 24,310,162 23,226,086 20,267,440 18,708,711 14,150,420

Cost of sales 16,502,405 16,631,197 16,645,655 14,594,894 13,297,138 9,990,872 Gross profit 9,315,564 7,678,965 6,580,431 5,672,546 5,411,573 4,159,548

Administrative,selling and distribution cost (5,196,178) (4,482,559) (4,034,728) (3,302,174) (3,006,685) (2,274,972)Other expenses (336,846) (262,926) (209,036) (181,301) (206,472) (164,081)Other income 416,927 361,719 140,728 89,154 62,192 72,573

(5,116,097) (4,383,766) (4,103,036) (3,394,321) (3,150,965) (2,366,480)Profit from operations 4,199,467 3,295,199 2,477,395 2,278,225 2,260,608 1,793,068 Finance costs 23,476 20,410 17,796 15,376 17,587 11,933 Profit before taxation 4,175,991 3,274,789 2,459,599 2,262,849 2,243,021 1,781,135 Taxation 1,357,102 1,052,621 766,346 673,699 621,728 616,801 Profit after taxation 2,818,889 2,222,168 1,693,253 1,589,150 1,621,293 1,164,334

80

Form of ProxyI/We

of

a member of COLGATE-PALMOLIVE (PAKISTAN) LIMITED

hereby appoint

of

of

who is/are also member/s of Colgate-Palmolive (Pakistan) Limited to act as my/our proxy and to vote for me/us and on my/our behalf at the Annual General Meeting of the shareholders of the Company to be held on the 22nd day of September 2016 and at any adjournment thereof.

Signed this day of 2016.

Witness 1

FolioNo.

CDC Participant ID No.

CDC Account/Sub-Account No.

No. ofShares held

Signature overRevenue Stamp

Notes: 1. The proxy must be a member of the Company.

2. The signature must tally with the specimen signature/s registered with the Company.

3. If a proxy is granted by a member who has deposited his/her shares in Central Depository Company of Pakistan Limited, the proxy must be accompanied with participant’s ID number and CDC account/sub-account number along with attested photocopies of Computerized National Identity Card (CNIC) or the Passport of the beneficial owner. Representatives of corporate members should bring the usual documents required for such purpose.

4. The instrument of Proxy properly completed should be deposited at the Registered Office of the Company not less than 48 hours before the time of the meeting.

or failing him

Signature

Name

CNIC No.

Address

Signature

Name

CNIC No.

Address

Witness 2

Operating and Financial Highlights - Continued

2015-2016 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011FINANCIAL RATIOS

RATE OF RETURN

Pre tax return on equity % 39 36 32 34 41 41Post tax return on equity % 26 25 22 24 29 27Return on average capital employed % 28 25 22 24 30 27Interest cover times 179 161 139 148 129 150

PROFITABILITY

Gross profit margin % 36 32 28 28 29 29Operating profit to sales % 16 14 11 11 12 13Pre tax profit to sales % 16 13 11 11 12 13Post tax profit to sales % 11 9 7 8 9 8

LIQUIDITY

Current Ratio ratio 4.0:1 4.1:1 3.5:1 2.9:1 2.7:1 2.2:1Quick ratio ratio 2.9:1 2.8:1 2.2:1 1.5:1 1.1:1 0.8:1

FINANCIAL GEARING

Debt equity ratio ratio 0:100 0:100 0:100 0:100 0:100 0:100Gearing ratio times 0.28 0.28 0.32 0.39 0.43 0.47

CAPITAL EFFICIENCY

Debtors turnover days 8 10 10 10 10 8Inventory turnover days 60 56 58 71 72 67Total assets turnover times 2 2 2 2 2 2Property, plant and equipment turnover times 9 8 7 6 7 5

INVESTMENT MEASURES PER ORDINARY SHARE

Earnings per share - restated Rs 58.78 46.34 35.31 33.14 33.81 24.28Dividend cash (including proposed) Rs 30 25 17 14 14 14Dividend payout (including bonus) % 51 54 48 41 36 42Dividend yield % 2 2 1 1 2 2Price earning ratio - restated times 25.94 32.74 50.72 55.37 28.98 31.68Break-up value - restated Rs 222.65 188.79 161.51 138.28 115.45 90.82Market value - low Rs 1,300 1,355 1,310.00 970.00 534.83 556.01Market value - high Rs 1,659 2,290 1,969.00 2,100.00 979.99 1,008.18 Market value - year end Rs 1,525 1,517 1,791.00 1,835.00 979.99 769.25Market capitalization -restated Rs in Mn 73,131 72,748 85,887 87,997 46,995 36,889 Dividend - Cash % 300 250 170 140 140 140Dividend - Bonus shares % 0 0 0 10 20 15

81

Form of ProxyI/We

of

a member of COLGATE-PALMOLIVE (PAKISTAN) LIMITED

hereby appoint

of

of

who is/are also member/s of Colgate-Palmolive (Pakistan) Limited to act as my/our proxy and to vote for me/us and on my/our behalf at the Annual General Meeting of the shareholders of the Company to be held on the 22nd day of September 2016 and at any adjournment thereof.

Signed this day of 2016.

Witness 1

FolioNo.

CDC Participant ID No.

CDC Account/Sub-Account No.

No. ofShares held

Signature overRevenue Stamp

Notes: 1. The proxy must be a member of the Company.

2. The signature must tally with the specimen signature/s registered with the Company.

3. If a proxy is granted by a member who has deposited his/her shares in Central Depository Company of Pakistan Limited, the proxy must be accompanied with participant’s ID number and CDC account/sub-account number along with attested photocopies of Computerized National Identity Card (CNIC) or the Passport of the beneficial owner. Representatives of corporate members should bring the usual documents required for such purpose.

4. The instrument of Proxy properly completed should be deposited at the Registered Office of the Company not less than 48 hours before the time of the meeting.

or failing him

Signature

Name

CNIC No.

Address

Signature

Name

CNIC No.

Address

Witness 2

82

Fold

Her

e

Fold

Her

e

Fold Here Fold Here

Fold Here Fold Here

Company Secretary

Lakson Square, Building No. 2,Sarwar Shaheed Road,Karachi.74200.Phone: 35698000

COLGATE-PALMOLIVE (PAKISTAN) LIMITED

AFFIXCORRECTPOSTAGE

83

Fold

Her

e

Fold

Her

e

Fold Here Fold Here

Fold Here Fold Here

Company Secretary

Lakson Square, Building No. 2,Sarwar Shaheed Road,Karachi.74200.Phone: 35698000

COLGATE-PALMOLIVE (PAKISTAN) LIMITED

AFFIXCORRECTPOSTAGE

Lakson Square, Building No. 2,Sarwar Shaheed Road, Karachi - 74200.

Tel.: +9221-35698000

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